ExxonMobil Pummeled in This Portfolio

• Report this Comment On March 31, 2009, at 7:00 PM, NJBILL46 wrote:

  This is an excellent article. Those who look at BP and other oils as models should remember Bill Ford promising a green company a decade ago, GM's diversionary tactics with fuel cells, and many others. These are only intended to keep critics off their backs at the expense of their shareholders. Exxon has been one of the few honest companies around. They say their core is oil and gas and they intend to do their best to meet the world's growing oil/gas needs while making a good return for their shareholders. What can be more straightforward? It's not Obama's or anyone else's business to tell them what business to be in.

• Report this Comment On April 01, 2009, at 3:58 AM, Seano67 wrote:

  "It's not Obama's or anyone else's business to tell them what business to be in."

  I agree, and it's not Obama's business to be forcing out the CEO of a publicly held American corporation either (even if they have taken governmental aid). That's a right that is traditionally reserved for shareholders and/or boards of directors, but yet Obama stepped right over those boundaries as if they weren't even there.

  It's very troubling to see our government taking such an activist role into American business like that. I feel we are on a very slippery slope, and are rapidly descending downward into something that is much less a free market economy than a controlled one.

  And RE: Exxon.... yeah, I have caught a definite anti-Big Oil vibe off Obama and his team. I believe they resent Big Oil and maybe even would just as soon see them punished, because they view Big Oil as being an integral partner with the past 8 years of the Bush administration, with both sides benefiting tremendously from that partnership. They view them pretty much as being one and the same, so it doesn't surprise me that they're not going to be particularly friendly towards Big Oil. But again, that's not his place, and so here we go overstepping that boundary once again.

• Report this Comment On April 01, 2009, at 3:46 PM, bangarangapple wrote:

  "But the International Energy Agency -- the energy seer for most consuming nations -- maintains that fossil fuels will supply most of our energy needs for decades to come.

  More specifically, Exxon itself calculates that by 2030, fossil fuels will still account for 80% of energy demand."

  And...so what? Exxon's an oil company. Of course they want to calculate it that way. The International Energy Agency is likely just being conservative also because no major initiatives to ween off of oil have been started internationally. There are plenty of alternative energy resources out there and we will have to use them because global energy demand should increase dramatically by 2030.

  With statements like, "First, I roundly applaud efforts to extricate ourselves from dependence on foreign oil." and That's fine, even commendable, since it's obviously incumbent on mankind to find a path away from fossil fuels.", this author certainly seems to throw up his arms in defeat rather quickly. He seems "realist" to the point of just being cynical.

  What really seems to be going on is revealed when the author admits his subjective bias:

  "That's fine, even commendable, since it's obviously incumbent on mankind to find a path away from fossil fuels. But I'm still agnostic about both the viability of green energy technology for the masses, and the ultimate effects of hydrocarbons on climate change."

  First of all, as with the IEA, scientists often like to be conservative so that they do not ruin their reputation with overly-optimistic projections. This goes for global warming as well. There is good evidence that we should at least take heed of hydrocarbons' potential effect on climate change.

  Second, global wind power potential alone (note, not even including biofuels and solar) for the year 2000 was estimated to be ~72 TW (or ~54,000 Mtoe). The world uses 15 TW of energy yearly. As such, sufficient wind exists to supply all the world'ss energy needs (i.e., 6995-10177 Mtoe), although many practical barriers need to be overcome to realize this potential. That study comes form Stanford: Stanford University’s Global Climate and Energy Project (GCEP), 2/3/05

  Thus, global warming aside, we more than enough potential renewable energy to feed the world's electricity needs. The opportunity cost that Exxon incurs by going after hydrocarbons instead of renewable energy is thus tremendous. I can see why we'd want a policy change away from a finite, potentially damaging liquid that fills our enemies' coffers.

• Report this Comment On April 01, 2009, at 5:37 PM, NJBILL46 wrote:

  bangarangapple makes the case for picking up the pace towards non oil/gas energy. Let's not argue over whether their view on the viability of alternatives is right ... let's get back to the question of whether the government has a right to dictate where a private enterprize invests.

  Whether Exxon is a producer or not, the US and the world will use the same amount of oil and gas. In fact, that energy might cost more if a technology resource and tough competitor like them were out of the picture.

  Further, their oil/gas business doesn't slow down others' development of alternatives. You could even make the case that not having to compete with Exxon on development of alternatives presents a more attractive opportunity for others. After all, as bangaranapple says, it's obvious that wind and other energy sources are good bets.

  Yet, bangaranapple's logic is that punishing Exxon will get them to invest their money in areas they feel are not in the best interest of their shareholders. Aside from this not really getting us to their desired alternatives any faster, does the government have the right (much less the wisdom) to influence business decisions in this way ?

• Report this Comment On April 02, 2009, at 10:50 AM, bangarangapple wrote:

  NJBILL46, thank you for focusing my critique. I did not make myself clear. First of all, I only said that I could see why we'd want a policy change. If you look at the statistics on how long it has historically taken humanity to move from one energy source to the next, the numbers are not encouraging. The market sometimes needs coaxing. However, I did not express a desire to punish Exxon.

  Personally, I would not want to punish Exxon. I think that large tax breaks for renewable energy companies and an expansion of the power grid of North America would be sufficient incentives. Perhaps even government-industry joint ventures into renewable energy would be favorable. Punishing Exxon just makes the company's life harder and, you're right, we have no place in telling them what to do. No matter how much opportunity cost they incur.

  The main point I took issue with, and I still take issue with this: "the US and the world will use the same amount of oil and gas." Now, my question was, in light of the viability of renewables (which the author called himself "agnostic" to), why do we have to do that? The answer is: We don't. Yes, we should transition away carefully so that we have the energy that we need during the transition. But there's no need to use the same amount of oil and gas. At least not by the United States. Most of us probably don't like that fact that we're feeding countries like Iran, Venezuela, and Saudi Arabia. And oil is finite, so it is a temporary solution. And while humanity's effect on global warming has not been proven, neither has it been proven that humanity is having negligible effect.

  I just think that when an author lauds efforts to move away from carbon-based energy sources, the author should not in the same breath throw up his hands in defeat and say: "Well, the IEA and Exxon say that most energy will come from oil, so we should just let that be our fate." I hope that this clears things up.

• Report this Comment On April 02, 2009, at 6:09 PM, NJBILL46 wrote:

  OK bangaranapple, we're getting close.

  The critical aspect neither of us commented on is conservation. I think it's clear that two decades from now we still will have most of our energy from fossil fuels. But the actual amount that's still fossil based can be substantially reduced by conservation.

  I'm hopeful that the Obama stimulus plan monies will be invested wisely, but we also need some courage on the part of those in Washington. Until now, they've avoided reasonable vehicle mileage goals and made poor decisions that had unintended consequences (ethanol). What's really needed is a carbon tax that gives us all an incentive to be more responsible in our energy use.

  I'm against carbon trading ... the financial types will find a way to game the system and make a fortune for themselves. The carbon tax is transparent and, by the way, makes it easier for the renewables to gain momentum.

• Report this Comment On April 02, 2009, at 10:51 PM, bangarangapple wrote:

  NJBILL, conservation is a good goal as long as we are conserving by being more efficient (note, not eliminating opportunities for society). You are right that we can substantially reduce our energy usage by conservation. However, the demand for energy will almost certainly rise regardless of how much we conserve. Only 32% of world population consumes 59% of global electric power (Renewable & Sustainable Energy Reviews, Sep 2008). The BRIC countries are rising. While there is no immediate threat to human survival, our thirst for energy is rising.

  Richard Smalley (1943-2005), a Nobel Laureate at the forefront of research on carbon nanotubing and world-renowned thinker on energy shortage solutions had a great deal to say on this matter. He predicted that world demand for energy in the year 2050 would be 30–60 terawatts, or the equivalent of 450–900 million barrels of oil per day, depending on how far developing nations raise their standards of living. This means that he predicted that our energy usage would either double or quadruple by 2050.

  So how much would we have to invest? The experts agree: in order for supply to meet demand, globally there needs to be $16-$17 trillion in infrastructure investment over the next 20+ years. Sources: United Nations Economic and Social Council, 5/5/06; Oxford Review of Economic Policy, 2005; Dr. Faith Birol, Chief Economist, International Energy

  Thus, why should we be investing most of this money in fossil fuels? Why should we still have most of our energy from fossil fuels? How much opportunity cost is wasted by continuing to pursue carbon? While there are many practical reasons that carbon probably will be at least a major contributor to our energy needs in the next 20 years, I simply do not see why we need to accept that.

  As for policy tools, I wouldn't disagree with a carbon tax. While I am generally opposed to new taxes on the commercial sector, this would encourage renewables to gain momentum. As I said, I could see why we'd want a policy change.

  Still, even if we include a carbon tax, I would move in the direction of directly encouraging new renewable energy initiatives instead of only discouraging carbon. More carrot, less stick.

• Report this Comment On April 02, 2009, at 10:54 PM, bangarangapple wrote:

  Ah, I see that I left out some of Dr. Birol's information: Dr. Faith Birol, Chief Economist, International Energy Agency, Exploration & Production: The Oil and Gas Review, 2004.

• Report this Comment On April 03, 2009, at 8:16 AM, NJBILL46 wrote:

  bangaranapple ... your enthusiasm and idealism are evident in your comment "while there are many practical reasons that carbon probably will be at least a major contributor to our energy needs in the next 20 years, I simply do not see why we need to accept that."

  I think the cost of developing however much oil and gas is needed over this time will be borne by those that use the energy. And a carbon tax could raise substantial funds for alternatives. But this global demand will be there .. it will be what it will be.

  The speed at which alternatives develop is a different matter. This will depend on government funded R&D, subsidies, and other means of influencing an otherwise slow market for the alternatives. If that's what you mean by not accepting it, I think the you will be pleased with such developments in the future.

  But I don't think oil/gas investments detract from this and they shouldn't be considered lost opportunity. If anything, the carbon tax can be the major source of funding to accelerate development of the alteratives.

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