International Oil Companies: Evil Giants or Something More? Part I

Oil Fields

by Margaret Kearney, Louisa Kellogg, Jacqueline Ho, Katherine Wong

The combined 2011 revenues of four of the most well-known international oil corporations — Exxon Mobil Corp., Royal Dutch Shell, BP, and Chevron — adds up to a number roughly the size of the GDP of India, according to the International Monetary Fund. Needless to say, these monsters are big and powerful.

These particularly large corporations piqued the interest of four Brown students with backgrounds in environmental activism last fall, against the anti-capitalist backdrop of the Occupy Wall Street movement. We’ve spent the past semester studying the numerous variables that affect the behavior of oil corporations with the hope of gaining a better understanding of these elusive beasts. Through several months of studying the motivations behind oil corporations’ actions, we found the workings of the oil industry to be more complex than we’d initially imagined and that as much as we’d like to think of these companies as fairytale villains, there’s much more to them than a simple drive for profit.

Despite the temptation to bring our biased backgrounds into our work, we actively avoided this and tried to approach our studies from a neutral perspective. But now that the semester is over, we can’t ignore the implications for our original passions — as activists targeting the oil industry, we must consequently consider corporations from a wider, more nuanced scope. We cannot simply label all international oil corporations (IOCs) homogeneous evil giants in order to truly understand and manipulate the pressures that influence their behavior.

This project has challenged our initial assumptions about the behavior of the oil industry and its behaviors. In this series, we hope to explain a few of the complexities we’ve come across, particularly with regards to the viability of renewable energy. We’ll focus on two companies: Exxon Mobil and British Petroleum (BP), chosen because of their different approaches to the issue of climate change. Though Exxon Mobil and BP are structurally similar, their history, culture, and location are key in determining their varied behavior — particularly their stances on renewables and climate change.

In many ways, Exxon Mobil and BP are similar corporations. Established around the end of the 19th century, the two corporations are similar in size and employ around 83,500 workers each. BP’s net income in 2011 was $8.05 billion, while Exxon Mobil’s was $9.4 billion. Both companies are members of trade associations like the American Petroleum Institute; both are publicly listed and have a wide, international consumer base with operations across the globe. Exxon Mobil and BP operate heavily in the U.S. and are therefore subject to similar regulatory standards. Incidentally, both have had very large-scale, well-publicized spills in and near the U.S.

Despite their similarities, BP and Exxon Mobil have developed radically different stances on climate change and renewable energy. In 1997, BP became the first major international oil company to leave the Global Climate Coalition, a coalition of IOCs that opposed action to limit greenhouse gas emissions and support international climate regulations on greenhouse gas emissions. Meanwhile, Exxon Mobil continues to fund climate deniers and opposes international regulations on greenhouse gases.

BP signed the United Nations Global Compact, thereby committing to follow a set of principles regarding human rights, labor, the environment, and anti-corruption. Exxon Mobil is not a signatory of the compact.

BP supports the Kyoto Protocol and cites Intergovernmental Panel on Climate Change findings on their official website. Exxon Mobil, on the other hand, is critical of the IPCC’s findings and instead relies on an in-house team of researchers.

BP has actively begun diversifying its energy portfolio with renewable energy initiatives and, in 1997, publicly committed to investing $160 million in solar energy. BP has also pledged to reduce company-wide greenhouse gas emissions by 10 percent from 1990 levels by 2010. While BP has invested significant funds into developing renewables, Exxon Mobil does not see renewable energy as a viable alternative to oil and gas and has set no emissions reduction target.

In the next parts of the series, we will discuss the variables that set BP and Exxon Mobil apart and how this directly affects the extent to which they invest in renewables. For instance, the companies’ relationships with their home government (the U.K. for BP, the U.S. for Exxon Mobil) greatly affects the companies’ incentives to invest in renewables thanks to mechanisms such as tax structure and resource availability.

This article is the first of three in a series written by a Brown University Undergraduate Group Independent Study Project (GISP).

photo of oil pumps by Damian Gadal