A Free-Market Energy Blog

ExxonMobil at ALEC: Bring Back Lee Raymond!

By Robert Bradley Jr. -- December 14, 2017

“We in the petroleum industry are not dismissing the global climate change issue. But I don’t believe anyone should have the moral authority to deny people the opportunity to improve their way in life by arbitrarily depriving them of the means…. I hope that the governments of this region will work with us to resist policies that could strangle economic growth.”

– Lee Raymond, CEO, ExxonMobil (2010) [1]

Think Progress (the successor to the Joe Romm-founded Climate Progress at the Center for American Progress) published a recent piece by Mark Hand, “Industry Opposition Leads ALEC to Withdraw Anti-Climate Resolution,” subtitled “Right-wing lobbying group fails to pass resolution targeting EPA finding.”

Some excerpts from Hand’s piece follow:

A secretive right-wing lobbying group failed to pass a resolution this week that called upon the Environmental Protection Agency (EPA) to withdraw its 2009 finding that greenhouse gases are endangering the planet.

Members of the American Legislative Exchange Council’s (ALEC) Energy, Environment and Agriculture task force discussed the resolution at a summit in Nashville on Wednesday. Its backers wanted to send a strong message that they oppose the EPA’s so-called Endangerment Finding, which essentially compels the agency to regulate carbon dioxide and other greenhouse gases as dangerous pollutants under the Clean Air Act….

The resolution stated that President Donald Trump and members of his administration have consistently argued regulation of carbon dioxide under the Clean Air Act is unnecessary, ineffective, and economically destructive. “So long as the endangerment finding remains in place, efforts to roll back unnecessary environmental regulations adopted in the name of fighting global warming will likely fail,” the resolution read.

The defeat came from Big Business that support CO2 rationing from a combination of business gain (rent-seeking) and green imaging (‘whitewashing,’ to critics). In the past, such a resolution would have passed from the free-market, pro-growth, anti-Malthusian limits-to-growth membership. But this did not happen. Explained Hand:

… ALEC’s proposed resolution this week proved surprisingly controversial. Several major energy industry players and other corporate giants also expressed concerns with it….

Exxon Mobil Corp., the country’s largest oil and natural gas company and a member of the ALEC task force, has also come out against ALEC’s resolution, The Hill reported Tuesday. “As has been previously communicated to ALEC, we are concerned by the language of the resolution, especially relating to climate science, and do not support the resolution,” Kenneth Freeman, ExxonMobil’s manager of United States government relations, wrote in a letter to the ALEC task force on Monday.

A number of other large companies, large energy companies, and the trade group Edison Electric Institute, as well as the National Rural Electric Cooperative Association, also voted no.

Courage Needed

Decades of brow beating has taken a toll on companies. Obama’s eight years caused many to throw in the towel and go along, giving a green tint to their business-as-usual. And it will take time for a new federal government and free-market organizations to undo the past, fight back, and get the moral high ground back. But it is happening step-by-step with the strong intellectual case against climate alarmism/policy activism and the continuing triumph of fossil fuels in the marketplace.

It is pro-consumer and pro-taxpayer and pro-energy to reject pricing CO2 at home and abroad. Who is really for a carbon tax and cap-and-trade, both of which have little political and public support?

Corporate cronies can reconsider their position by cloaking themselves in the common good, not a quixotic quest for global Malthusian governance where political and intellectual elites win and just about everyone else loses.

Remembering Lee Raymond

Having courage and working from reality-out rather than imaging-in brings to mind Lee Raymond (1938–), the head of Exxon and then ExxonMobil from 1993 until his retirement in 2005.

Raymond created a lot of economic value for stockholders and societal wealth for the world’s energy consumers. And with energy developments since his retirement, history is treating his worldview and record very well. An online biography summarized the “reluctant public figure” as follows:

Lee R. Raymond headed one of the most powerful corporations in the world, Exxon Mobil Corporation. He began his career after receiving a PhD in chemical engineering from the University of Minnesota. The son of a railroad engineer from Watertown, South Dakota, Raymond kept his personal life out of the limelight while steering one of the world’s largest corporations.

Raymond set his course with Exxon early on with innovative moves that cut costs and increased profits, the hallmark of his entire career. With a changing view on petroleum-based products, Raymond defended Exxon against environmentalists and human rights activists while denying the viability of renewable energy sources.

He continued to pursue natural gas projects and grew Exxon in other parts of the world, despite war and threats of war in oil-rich countries in the early years of the 21st century. As a result, Exxon continued to grow even though the protests grew louder.

Raymond vs. Enron’s Ken Lay

Raymond was the antithesis of Enron’s founder and chairman Kenneth L. Lay. Raymond was an engineer; Lay a big -picture Ph.D. economist. Raymond worked his way up the corporate ladder in a variety of businesses; Lay, after regulatory jobs in Washington, D.C., entered the industry with a focus on federally regulated interstate natural gas pipelines.

Raymond liked to stay inside the office working on details; Lay liked to give speeches just about anywhere and to visit political capitals. He was lobbyist-in-chief for a business strategy seeking first-mover regulatory advantage.

Lay tried to make Enron into a new energy major, while ExxonMobil stayed focus on hard-asset energy operations most in demand by consumers. Enron’s newness was exploiting the new competitive space created by mandatory open-access with interstate gas pipelines and electricity transmission.

Lay went big for solar and wind; Raymond, who had to get Exxon out of those-type businesses in the 1970s, stayed focused on fossil fuels. As stated in his online biography:

As the 21st century loomed, Raymond still remained steadfast in his defense of the fossil fuel business, stating at an industry conference in 2000 that Exxon would stay away from renewable sources of energy. He cited Exxon’s history of concentrating on oil and said that oil would continue to be the corporation’s focus.

The Oil Daily reported that Raymond was a “vehement campaigner on behalf of the fossil fuel lobby [and] has argued for years that limiting the greenhouse emissions from fossil fuels believed to cause global warning will have a devastating impact on world economic growth” (February 16, 2000).

Raymond made this announcement despite the entrance into the renewables business of such competitors as BP, Amoco, and Shell. Those companies predicted that renewables would provide half of the world’s power within 50 years.

Real, Not ‘Politically Correct,’ Energy

The above online biography added:

Raymond continued his campaign to discredit the viability of renewable energy sources. Weekly Petroleum Argus reported that Raymond said “Even ‘green’ energy has an impact on the environment, noting that large-scale solar and wind farms take up land and can affect wildlife” (June 3, 2002).

But as an engineer and realist, Raymond knew that wind and solar were politically correct but economically incorrect–that they were energy dilute versus energy dense oil, gas, and coal. He knew that Exxon and other deep pockets fell for the renewable hype in the 1970s and lost. [2]

In a Houston Chronicle interview in 2004, Raymond explained his thinking:

One of the difficulties people have, even some who work in this business, is understanding the scale and size of the energy industry. This is important to understand in order to put in perspective what some of the alternatives are and to judge if they are significant in the context of the whole.

There are many alternative forms of energy that people talk about that may be interesting. But they are not consequential on the scale that will be needed, and they may never have a significant impact on the energy balance. To the extent that people focus too much on that—for example, on solar or wind, even though they are not economic—what they are doing is diverting attention from the real issues.

And 25 years from now, even with double-digit growth rates, they will still be less than 1 percent of the energy supplied to meet worldwide demand. I am more interested in staying focused on the 99 percent than the 1 percent. [3]

Less diplomatically, Raymond elsewhere trashed renewable energy as “a complete waste of money.”

Exxon Mobil has gone political in the post-Raymond era. Their business acumen has not quite been the same either. The two go together, actually. Stay tuned in 2018 for more on the ‘contra-capitalist’ corporation versus the free-market, consumer-driven, good-profits company.

———

[1] Lee Raymond (CEO, ExxonMobil). Quoted in Kevin Mooney, “BP’s Fall From Grace: Disgraced Oil Giant Was Once Favored by Green Groups,” Capital Research Center, December 2010.

[2] “The largest corporate conglomerates in America have long devoted themselves to making renewable energy markets a reality. Starting the mid-1970s, Exxon, Shell, Mobil, ARCO, Amoco, General Electric, General Motors, Texas Instruments, and Grumman all initiated aggressive renewable energy R&D projects.” Jerry Taylor and Peter VanDoren, “Evaluating the Case for Renewable Energy, Is Government Support Warranted?”, Cato Policy Analysis, January 10, 2002, p. 2.

[3] Lee Raymond, chairman and CEO, Exxon Mobil Corporation, in staff article, “Exxon Chairman Looks to Future after Time of Great Change,” Houston Chronicle, January 25, 2004, p. 1D at 4D.

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