Book Review: 'Private Empire,' by Steve Coll

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There’s a startling scene early in Steve Coll’s Private Empire in which Lee Raymond, then the chief executive of ExxonMobil, speaks with offhanded candor about where his loyalties lie. Asked by an industry colleague if his company might consider building more refineries domestically, the better to protect the U.S. from potential gasoline shortages and security crises, Raymond shrugs off the question. “I’m not a U.S. company,” Raymond says, “and I don’t make decisions based on what’s good for the U.S.”

As objectivist statements of rational self-interest go, that one’s a lulu—up there with Margaret Thatcher’s “There is no such thing as society.” You’d expect a Big Oil chieftan to be ruthlessly profit-minded, but to the point of putting profits ahead of country? Nevertheless, Coll writes, Raymond “saw no contradiction” in this stance: “He did indeed regard himself as a very patriotic American and a political conservative, but he was also fully prepared to state publicly that he had fiduciary responsibilities.”

This is one of many fascinating glimpses that Coll provides into the curious world of ExxonMobil, which, though it was surpassed recently by Apple as the globe’s largest nonstate-owned corporation in terms of market capitalization, remains unsurpassed as the globe’s most secretive. Raymond, an Exxon lifer who reigned over the company from 1993 until his retirement in 2005, consummating an $81 billion merger with Mobil along the way, is Private Empire’s dark-prince protagonist, a worthily fearsome heir to his corporate forebear, John D. Rockefeller. (Exxon is the most successful and profitable of the “Baby Standards” that arose in the aftermath of 1911’s Supreme Court-mandated breakup of Rockefeller’s Standard Oil.)

Private Empire could easily have been a very different book than it is. Coll could have gone the Michael Moore route, marshaling his reams of interview transcripts and WikiLeaks finds into a bilious, scorched-earth indictment. Raymond, with his brusque manner, back-channel access to Dick Cheney, and villainous mien—picture John Sununu with jug ears and an even flappier goiter—is an almost irresistible target. Yet Coll, a staff writer for the New Yorker and the president of the center-left New America Foundation think tank, goes about his business with restraint. Private Empire is a book meticulously prepared as if for trial, a lawyerly accumulation of information that lets the facts speak for themselves. To anyone who, unlike Raymond, believes in global warming, the goal of U.S. energy independence, and not partnering with regimes with spotty human-rights records, these facts will paint a damning portrait. But just as easily, a fan of Ayn Rand might read this book as a heroic narrative, pumping his fist and shouting “Yes!” every time Raymond or his successor, Rex Tillerson, shuts out his critics’ voices and redoubles his efforts to drill for crude, glorious crude.

Private Empire opens during a rare episode of vulnerability for Exxon: the 1989 Exxon Valdez crash and oil spill, which, Coll notes, was more a result of systemic failure than the fact that the tanker’s captain, Joseph Hazelwood, was drunk. For Raymond, then serving as the company’s president under his predecessor as CEO, Lawrence Rawl, it was a never-again moment, a lesson that the company needed to tightly control every aspect of its operations.

Under Raymond, Exxon truly did become a private empire, conducting its own foreign policy, using its own metrics to report its financial performance and oil reserves, and policing employee behavior to an almost Singaporean degree (good: church, being married, golf; bad: bohemianism, gay-friendliness, extreme sports). The corporation’s guiding principals were A) that, for all the talk of alternative and renewable energy, fossil fuels shall remain the primary and most remunerative energy source for decades to come; and B) that Exxon must do whatever it takes to discover or buy new oil and natural-gas reserves to replace what the company produces annually.

Much of Private Empire’s action centers around the lengths to which ExxonMobil has gone to ensure that its reserve-replacement figures remain boffo. This is not just a matter of bragging rights, but of survival: An energy company is required to file a report each year with the Securities and Exchange Commission disclosing the extent of its reserves, so that stockholders have a fair sense of whether the company is keeping pace or, perish the thought, contracting.

The trouble is that reserve replacement grows ever trickier an endeavor to pull off, especially on the monumental scale that Exxon, by its sheer size, demands. Much of the world’s oil and gas is now in the hands of state-owned companies in countries hostile to the U.S., such as Iran and Venezuela. As such, ExxonMobil has had to look increasingly far afield, to countries it euphemistically labels “transitional” and internally acknowledges as unstable and corruption-riddled—conflict-riven developing nations such as Nigeria, Chad, and Equatorial Guinea.

Doing deals in such places is fraught with risk and the potential for entanglement in rebellions, coups, and civil wars—to say nothing of the potential for running afoul of U.S. interests and ethical codes. At one point, Coll dryly describes ExxonMobil and the U.S. government as existing essentially “in alignment but each in its sovereign sphere,” yet the reality is no laughing matter. Much space is devoted to the company’s messy dealings in the resource-rich but independence-minded Indonesian region of Aceh, where the company is said to have propped up a homicidal national army that ran roughshod over the local Acehnese population in the late nineties. (A human-rights suit by a group of villagers against ExxonMobil is still pending.)

Raymond himself appears to have been naïve in his Russian dealings, hastening if not causing the downfall of the young post-Soviet petrogarch Mikhail Khodorkovsky. In 2003, Khodorkovsky was itching to cash out a minority stake in his company, Yukos. Raymond was interested but said he would buy in only if he received assurances that ExxonMobil could eventually obtain majority control of Yukos—what would have been a reserve-replacement grand slam. In September of that year, when Vladimir Putin visited New York, Raymond met with the Russian president and lobbied him one-to-one on the matter. Raymond thought the meeting went well, but Putin, Coll’s sources say, bristled at the American’s arrogance and, evidently, at Khodorkovsky’s presumptuousness in shopping around Russian resources. A few weeks later, Khodorkovsky was arrested on fishy fraud and tax-evasion charges, for which he continues to serve time.

More often than not, Private Empire is a compelling and elucidatory work, though its disciplined, very ExxonMobil-esque adherence to rigor and propriety does make for some moments of reader fatigue. (Would a light sprinkling of personality-based gossip or insouciant asides have hurt?) On the other hand, Coll’s reputation and approach are probably what made Raymond cooperate, to some degree, with the book’s preparation.

Private Empire is not without its suggestions of authorial bias. There’s a sinister cast to the way Coll frames the company’s continuing prosperity under Tillerson, whose recent triumphs include a 2011 agreement with Putin for ExxonMobil to work with Rosneft, a state-owned Russian oil company largely assembled from former Yukos assets, to drill beneath the frigid Kara Sea—where, it so happens, “oil development has become easier because of the rapid retreat of Arctic sea ice, most likely due to global warming.”

Yet the book’s general evenhandedness indicates that Coll also sees some logic in the ExxonMobil way as promulgated by Raymond and his heirs: Fossil fuels do indeed remain the immediate future of energy, and therefore the surest and swiftest way to profit; yeah, that’s the ticket. In Private Empire, as in George Lucas’s Star Wars hexalogy, the dark side is seductive, too.

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