ExxonMobil fights off call to invest in oil alternatives
Rockefeller-led shareholders urge world's biggest oil company to develop fossil fuel alternatives
Be efficient. Economise. Do your part. That was the advice yesterday from Rex Tillerson, chairman and chief executive of the world's largest oil company, to consumers who are buckling under the strain of high fuel prices.
The boss of ExxonMobil said sky-high oil prices would only start to come down when demand eased but he warned that the world would be reliant on fossil fuels for generations to come, "whether people like it or not". And Exxon itself would remain a petrochemical company, he insisted, after beating back dissident investors' proposals which demanded that Exxon plough money into alternative energy, including wind and solar power.
Mr Tillerson's victory came despite an intense public campaign by the descendants of John D Rockefeller, the legendary oil magnate whose 19th-century monopoly, Standard Oil, ultimately spawned ExxonMobil. The Rockefeller family took their battle to the floor of ExxonMobil's annual shareholder meeting in Dallas yesterday, saying that the company faced becoming obsolete if it did not face up to the realities of climate change. Michael Crosby, a dissident shareholder supporting the Rockefellers, predicted that "ExxonMobilsaurus Rex will disappear" if it does not change course.
But in the end, the family's proposal that Exxon set explicit goals for carbon emissions from its operations and from the burning of its products – which, if tough enough, would force it to develop alternative energy technologies – won only 31 per cent of the shareholder vote. A proposal to force Mr Tillerson to split his two roles won 40 per cent, no more than in previous years.
Exxon's case is that throwing money at alternative energy is a foolish way to deal with the immediate threat of climate change. Instead, it is focusing on reducing greenhouse gas emissions from its own operations, and from developing new oil-based products that reduce the environmental impact of consumers' energy use. The company highlighted its Mobil 1 synthetic motor oil that improves vehicle fuel economy, lighter weight plastics, and next-generation tyre-liners. If all the vehicles in the US incorporated these products, Mr Tillerson said, it would be "like taking 8 million cars off US roads".
Exxon says that world energy needs are going to increase by 40 per cent between 2005 and 2030, and oil and gas were simply the only fuels able to satisfy a majority of that new demand.
Neva Rockefeller Goodwin, great-granddaughter of the Standard Oil founder, questioned Exxon's assumptions, calling them "flawed" and contradict-ory. There is a growing momentum behind the development of alternatives to fossil fuels, she said, but if consumers do not switch, then climate change will cripple economic development in emerging markets and dem-and for energy will not be nearly as strong.
Many shareholders leapt to the defence of the company, however. Steve Milloy, representing the conservative Free Enterprise Action Fund, said: "As for those shareholders who don't care for the oil and gas business, get out. There are a host of alternative energy companies whose subsidies you can invest in. So why don't you?"
The oil industry has come under fire for record profits while consumers suffer record high petrol prices and increasing utility bills. As oil prices soared, Exxon made a record profit of $40.6bn (£20.5bn) in 2007, the equivalent of £1m every 25 minutes. Mr Tillerson himself was paid $16.7m last year, up from $13.0m in 2006.
"Mr Tillerson would have to put $96,000 of gas in his car each week to understand the devastating effect that high prices are having on workers around the country," Julie Goodridge, of NorthStar Asset Management, told the meeting.
After the votes, Mr Tillerson said Exxon would continue to plough money into oil and gas exploration projects which, in the medium term, could boost production and ease oil prices. In the short term, he said, consumers should do their part to economise. "People say their little part isn't going to make a different, but multiply that by 50 million and it can begin to."
The 400-plus shareholders in Dallas were greeted by protesters chanting "Exxon – enough", and demanding that the company acts to cut pollution.
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