ExxonMobil and the Precautionary Principle: Part 2

By Deborah Rogers


Rex Tillerson, CEO of ExxonMobil, has a distinct world view. In April, 2012 he stated “If you want to live by the precautionary principle, then crawl up in a ball and live in a cave”. Unfortunately this sort of “shoot from the hip” statement does nothing for building trust with regard to fracking.

According to Forbes, Mr. Tillerson stated:

“Because we have a society that by and large is illiterate in these areas, science, math and engineering, what we do is a mystery to them and they find it scary…We’ve been hydraulically fracturing wells in large numbers since the 1960s; first developed in 1940. So this is an old technology just being applied, integrated with some new technologies. So the risks are very manageable.”

Sounds reasonable on the surface but as Mr. Tillerson continues, one begins to get a true glimpse of the deeper psychological process behind his thinking.

“The consequences of a misstep in a well”, he states, “while large to the immediate people that live around that well, in the great scheme of things are pretty small, and even to the immediate people around the well, they could be mitigated…they are not life-threatening, they’re not long-lasting, and they’re not new. They are the same risks that our industry has been managing for more than 100 years in the conventional development of oil and natural gas.”

This is a curious statement because in Congressional testimony in June 2010 during the Macondo debacle, Mr. Tillerson painted a very different picture. He testified:

“When these things happen, we are not well equipped to deal with them.
We are not well equipped to handle them. There will be impacts, as we are seeing.”

A moment later he repeated himself.

“When they happen, it is a fact that we’re not well equipped to prevent any and all damage. There will be damage occurring.”

And yet Mr. Tillerson once claimed that ExxonMobil was prepared for an oil spill of up to 166,000 barrels per day. BP’s Deepwater Horizon spewed a mere 40,000 barrels per day or approximately one quarter of Exxon’s boast. So may we expect the same “preparation” now when he states “the risks [of fracking] are very manageable”?

Perhaps most troubling, however, is Mr. Tillerson’s cavalier attitude overall. In another interview with Forbes magazine, Mr. Tillerson addressed climate change:

“I’m not disputing that increasing CO2 emissions in the atmosphere is going to have an impact. It’ll have a warming impact…We have spent our entire existence adapting, OK? So we will adapt to this. Changes to weather patterns that move crop production areas around — we’ll adapt to that. It’s an engineering problem, and it has engineering solutions.”

This is one of those off the cuff remarks that is no doubt meant to reassure an “illiterate” public. What it does not do is properly assess the consequences behind such a statement.

Changes to crop production areas would mean vast disruption which in turn would mean food shortages. Moreover, such a callous attitude precludes not only any attempt to avert such a disaster but also gives voice to an attitude that is all too prevalent. In other words, the environment is disposable. If we ruin one place we will just move onto the next. And presumably the next…and the next…. Further, not only is there a complete disregard for the environment but perhaps equally sinister is the utter disregard for the people – their lives, their livelihoods, their communities. In short, a complete disregard for humanity. Never in Mr. Tillerson’s comments is there a mention of attempting to avert such a disruption which in human terms would be unheard of in the modern world.

Thinking this through, one cannot help but wonder if Mr. Tillerson’s “engineering solution” will include moving entire cities? And will he then argue that to be a fantastic job creator. Are we to give no thought to the ruptured communities, the dying townships and devastated cities which are unfortunately located in those disposable crop production areas? What will be the true economic impact of such a disruption? Could we even calculate such a number? Would we even want to?

Mr. Tillerson goes on to pontificate:

“There are still hundreds of millions, billions of people living in abject poverty around the world. They need electricity. They need electricity they can count on, that they can afford. They need fuel to cook their food on that’s not animal dung.”

This is a perplexing statement for several reasons. Firstly, it confuses need and want: people don’t need electricity, they want it. It is a relatively modern convenience. People need food, clean drinking water and clean air. Secondly, it presupposes that there will be so little disruption from a “movement of crop production areas” that the worst thing humanity will have to deal with is cooking on a dung fire! Thirdly, crude oil prices hit record highs in the last few years and most of the world’s population, particularly those who cook on dung fires, are already priced out of the electricity market.

ExxonMobil, on the other hand, has been enjoying record profits in the billions dollars and has used much of that windfall doing nothing more than buying back their own shares. This in an attempt to make earnings and production look prettier. In fact, it has not been unusual for ExxonMobil to spend $5B or more per quarter just on share repurchases in the last few years.

Here’s an “engineering solution” for you! Five billion dollars per quarter, or $20 billion or more per annum, would buy a helluva lot of solar ovens for all those people who now cook on dung fires. And yet, somehow I doubt very seriously that they will receive any help from the world’s largest oil and gas company. After all, that is an “engineering solution” that has no profit potential for ExxonMobil.