Later this year, the Rockefeller family is going to ask Exxon to level with them. The descendants of John D. Rockefeller, the founder of Standard Oil, which later became Exxon, are significant shareholders in the company, although the size of their share isn't publicly known. In recent years, they have been pushing Exxon to invest more in renewable energy, to study the impact of carbon emissions on developing countries, and to change its corporate structure to allow more internal debate. The changing energy landscape and the pollution problems associated with oil threaten the company, its shareholders, and the environment, they say. And they believe the responsible thing, from a business and moral standpoint, is for Exxon to be proactive and to help shape the clean energy future, rather than waiting for the market to whip it in that direction.
The Rockefellers are preparing a resolution to present to shareholders at the company's annual meeting in Houston in May. The proposal would require Exxon to disclose the risks it faces if demand for oil declines in coming years as the world turns to other sources of fuel. In other words, the resolution's backers are wondering if Exxon is worried about the future of oil and whether it's taking the risk of climate change seriously.
"We want to know what they are thinking," says Neva Rockefeller Goodwin, a great-grandaughter of John Rockefeller and director of Tufts University's Global Development and Environment Institute. "We want to know what Exxon is thinking about the possibility that the future demand for oil and gas will be less than they expect," she says.
"It's perfectly possible Exxon is doing a lot of good thinking on this," she adds. "But they're not letting on."
What Exxon is thinking is an intriguing question, and it's one people have been mulling over for years, especially when they consider the future of energy. Exxon is the biggest American corporation in terms of revenue. (It shot past Wal-Mart on the Fortune 500 in 2009.) Its decisions are carefully studied and debated by analysts. They often are mimicked by fellow oil companies. Everything Exxon does is deliberate and meticulously planned. Its technological prowess is widely envied. And among all the major U.S. oil and natural gas companies, it has arguably been the most resistant to shifting its priorities away from oil.
A slow shift. This is not to say Exxon isn't doing anything. Last summer, it made its first serious foray into alternative fuels by plunking down $600 million to develop algae biofuels. The move, the company says, came after it concluded that the product could be viable (which is to say profitable) without government help. "When Exxon decides to do something, it's not without a lot of prethought, and they stay with it," says Scott Tinker, a University of Texas geologist who has worked closely with Exxon. "That ship doesn't turn very quickly. They think about things. They do their homework."
Then, late last year, Exxon acted again, bidding $41 billion for XTO, an unconventional natural gas company that is based in Texas. People who follow Exxon had been expecting a move like this for a while, not necessarily in natural gas but in something, because Exxon had been sitting on a large pot of money. The bid would make Exxon the largest holder of new sources of natural gas. Testifying about the merger before Congress in January, CEO Rex Tillerson noted that natural gas, of all the fossil fuels, is by far the cleanest, with about half the carbon emissions of coal. He was joined by Bob Simpson, CEO of XTO. Asked why natural gas might be so attractive, Simpson replied, "Natural gas is the wave of the future."
Exxon historically has been more comfortable looking to the past, however. In 1997, BP and Shell broke with the industry and said, yes, there is a climate change problem, while Exxon held its ground. It's a saga that played out roughly 10 years ago as geological evidence showing that carbon emissions were a serious problem grew, recalls Bryan Lovell, a researcher at Cambridge University and a former BP geologist whose new book, Challenged by Carbon, traces the oil industry's grappling with the issue. Exxon CEO Lee Raymond, who retired in late 2005, "got left behind by the science," Lovell says. "He got left behind by the industry's tactics. Exxon was saying, 'We are an oil company; if you are worried about the environmental stuff, go away and talk to someone else.' " Meanwhile, BP and Shell, reading the science and public mood, felt that it would be smarter to acknowledge climate change and shape their responses in advance.