Category — Business strategy and messaging

Last week I blogged about the news accounts of ExxonMobil’s coming out in favor of a carbon tax. I was too hasty. I should have read Rex Tillerson’s speech first–and very carefully. Mr. Tillerson did not call for a carbon tax as reported in the Wall Street Journal. Deep in his speech, Tillerson argued that carbon taxation is better than cap-and-trade as a regulatory program.

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[Note: This post has been superceded by Under Further Review ...]

ExxonMobil’s new corporate position in favor of carbon taxes, reported today by the Wall Street Journal, is not entirely unexpected. It is the result of a policy drift of recent years toward compromise and appeasement with the company’s political critics.

But I doubt that ExxonMobil has bought into alarmism. Back at Enron, where I was director of public policy analysis, we didn’t necessarily buy into climate alarmism but we welcomed the public’s concern because we had seven profit centers (see pp. 3–4) that stood to benefit. ExxonMobil, the anti-Enron, has not set itself up as a rent-seeker, but it apparently wants a seat at the policy table given the perceived choice between a carbon tax and a carbon cap-and-trade scheme.

It is ironic that ExxonMobil’s shift has come at a time when the case for climate alarmism is in growing trouble. Global temperatures are flat, not accelerating, as Chip Knapperberger recently blogged on this site. Climate mini-alarms, as I argue in  “Climate-Change Alarmism Runs Into a Reality Check” in today’s Houston Chronicle, have not held up well.

I wish that Rex Tillerson, ExxonMobil’s chairman, would oppose carbon taxes on the grounds that 1) it would hurt motorists and other energy users by raising prices; 2) it is a “solution” for an ill-defined problem; and 3) it could spark an international trade war via border tax-adjustments on countries that do not have such a tax.

But perhaps Mr. Tillerson (or his eventual successor) will change his mind and not support carbon dioxide pricing/regulation per se. Back in 1981, Exxon Chairman C. C. Garvin told a group of environmentalists what they wanted to hear: “Indeed, we believe that in the United States oil use reached its peak several years ago and is on the way down.” That was also when Mobil head Rawleigh Warner predicted that  the “brief interlude” of the oil age was coming to a close, and the head of the American Gas Association, George Lawrence, predicted that natural gas would soon be too scarce for industry use (for cites, see pp. 264–65 of Capitalism at Work). They were all wrong by a long shot during this alarmist era.

Government intervention in the name of “sustainability,” not the interaction between man and nature, is the threat to energy  sustainability. This may be exactly what Obama’s energy/climate team does not want to hear, but it is good news for mankind nonetheless.

There is way too much money being spent on advertising by the major energy companies–at least from the viewpoint of a nonpolitical energy world.

The December 8, 2008, Wall Street Journal, for example, contains a phenomenal 4 1/12 pages of industry ads. For the 20-page front section A, that comes out to about 20%–surely an all-time record. There was a lot of industry advertising back during the energy crises of the highly regulated 1970s, but nothing like this! [Read more →]