I've always wondered about this. Presumably the people leading big oil companies are not dumb idiots; so why wouldn't they take this knowledge and prepare in advance? Exxon could be the leading global provider of renewable energy right now, set to dominate the industry for a century or more. But instead, they are a crumbling company leading a death march of society and their own bank accounts. Why? Why would a big company do this? Is it that really, honestly that hard for people in power to recognize that trying to prevent progress in their industry is exactly what will get them in trouble, lose them all of their money and potentially land them in jail? It seems crazy to me that Exxon didn't pivot their business model 40 years ago. If it was so obvious to them, why not try to own a new > $1T market for the 21st century?
For wealthy, older folks it makes more sense in terms of personal wealth to optimize for short term profits rather than go through the pain of pivoting and retooling the business in order to set it up for success down the road. So when the board and major investors ran the cost/benefit analysis of investing billions and undertaking the risk of shifting towards the renewables market vs. funding a few studies and paying off some scientists, they rationally chose the latter.
And they (whoever was making these decisions in the 1970's and 80's) were successful. They retired wealthy and those who are still around will not be held accountable today.
Edit: Also, shareholders would say this was and continues to be the right move. The company has a $350bn market cap today.
We do not have any semblance of an effective credit/tax system for pollution, global warming, and other such negative externalities. Until we (who? the UN? the WTO?) put a serious, economic price on pollution that shows up in the 10Ks, we can expect boards/investors to keep making the same choices.
That's the kind of "rationality" that would end up with the whole world in a smoldering pile of ruins.
if you're going to be around for thousands of years, the only way to avoid being held accountable for decisions like this is to not make them.
And it's mostly been scary for good reason. Just because an organization has the resources of an incumbent doesn't mean it has the skills required to successfully pivot the business. Kodak is truly a great example, for its corporate culture was notoriously hidebound after decades of reign over imaging. Even with today's hindsight, I suspect the cultural revolution required to adequately embrace digital imaging at Kodak would seem a nigh unimaginable task.
What are the best indicators that Exxon is a crumbling company?
I don't buy this idea one bit - but let's say I did agree. That would be the most damning evidence ever presented that capitalism is a direct path to extinction for society: your idea that the only legal path forward is to heat up the Earth as much as possible and drive the cause of a mass-extinction event. No thanks, let's not be capitalists then.
In reality I disagree - they would not have been sued by their shareholders, nor should they have been. Isn't it becoming clear that their business was built on lies? I believe their shareholders should sue them right now, for telling those lies.
> Oil is still going strong
Oh really? It doesn't look that way to me.
> Oh really? It doesn't look that way to me.
What are you looking at that indicates otherwise?
Global climate change is costing the world tens of trillions of dollars, and the cause of this huge burden is our use of oil. Oil is not going strong, it is causing global-scale mass extinctions and will cost first-world economies trillions and trillions of dollars in the coming decades.
> Global climate change is costing the world tens of trillions of dollars
It has certainly been speculated that if the ocean rises due to climate change, that will be very expensive, but I'm not aware of any current expenses of twenty trillion dollars or more that can be directly and convincingly linked to climate change. Since you seem very certain about it, though, perhaps you can provide some links?
But this is my point - no, we wouldn't still need loads of oil to continue our day-to-day lives, if these lies by Exxon had not been told. If we had spent the last 40 years going full-speed to develop alternatives then we would not have this problem you pose right now. Cars would be electric, battery factories would be commonplace, solar panels would be everywhere - and we would not be so dependent on oil.
They care about short term profit.
Ten years from now, any car maker that isn't building an EV will be considered insane. Ten years ago, it was Musk that was considered insane for wanting to sell an EV. It requires strong leadership, vision and commitment to move to the "new paradigm", even if that is "the future", which probably isn't very obvious at all at the time.
Look at solar panels, too. Same thing. Just 5 years ago they cost 4x more. You can see how people would consider you crazy for wanting to go into the solar panel business 5 or 10 years ago, when some of the leaders in the business now entered the market.
If you haven't read it already, I strongly suggest reading The Innovator's Dilemma. It will give you more insight into why this sort of stuff keeps happening:
What are the renewable energy focused companies in 2015 that are doing any revenue (let alone profit) that in any way matches what Exxon is doing today?
Nobody thinks the demand for oil is going to drop significantly in the next 15 years. So, Exxon has time and the cash hoard to buy whoever figures out how to make real money from renewables.
Coal companies on the other hand are in for a world of hurt.
Most companies(which are just peoole) doesn't start thinking too far in the future until the curves of those "next few years" point abruptly downwards.
Pretty much the only big companies operating in the manner you describe (constantly in and out of growth areas) would be Samsung and Siemens, I guess.
When the only tool you have is a hammer, everything looks like a nail.
When the only thing you care about is power, then the whole life becomes a power game.
"Progress? Pffft, that's for nerds."
There are no rational actors when it comes to money, it's all Wille zur Macht, with some at the top and most at the bottom. And "success" on this scale is only fanning the desire for more.
Human nature is pretty screwed up.
No one in their right mind expects to wake up and find that an oil company has come to the conclusion that "it's really bad stuff and we're going to exit the market immediately on moral ground" or "start making clean oil".
Climate change is a global problem that demands a solution by governments. Oil companies should be exempt from prosecution over climate change. If you're going to say they've profited while the seas are rising, fine, then tax them, not sue them.
That's not what this is about - the question here is that Exxon might have prevented the public from understanding the health risks from using Exxon's product. That means that they way the population votes, the way the population buys products, has been a directed by the lies of Exxon. We can and we will hold them accountable for those lies and the damage caused.
> Oil is so undeniably important to the economy and indeed livelihood at this point, that the U.S. has salt caverns full of it in case of an emergency.
Oil is only that important because the industry has actively prevented alternatives from being developed. If they had been more forward-thinking, then oil wouldn't be that important and we wouldn't have all our eggs in one basket.
> No one in their right mind expects to wake up and find that an oil company has come to the conclusion that "it's really bad stuff and we're going to exit the market immediately on moral ground" or "start making clean oil".
Well, I certainly do. Are you saying that I'm not in my right mind? Let's be more polite here, please.
> Climate change is a global problem that demands a solution by governments. Oil companies should be exempt from prosecution over climate change. If you're going to say they've profited while the seas are rising, fine, then tax them, not sue them.
They are not being sued because they sold oil. They are being sued because they lied about the known health risks associated with buying their oil.
This is a bit different from how the tobacco companies were sued for actual health effects (although their attempts to mislead the public were a component, though had nothing to do with misleading shareholders AFAIK). It's more akin to prosecuting Al Capone for tax evasion when there isn't enough evidence to get him for the main crime. Since the attorney general can't realistically win a law suit on the ecological effects of fossil fuels he's trying to get them for knowingly misrepresenting how future regulations will effect Exxon's bottom line.
I bet it will be difficult to prove malice. Free speech has wide bounds.
Exxon does include climate change as a risk in their financial reports and legally, if not morally, the executives are doing their job by undermining the public debate. The issue here isn't their propaganda, but whether they based their financial disclosures on propaganda they knew to be false. Exxon is in big trouble if the people responsible for their financial reports (which are signed by a C level executive) based their risk assessment on research that they knew to be fraudulent, even if they can legally fund and publicize that research to mislead the public.
I know it doesn't seem that way, but they must have perceived a danger of being sued over climate change (not health, by the way) in order to have taken these actions. I take issue with a society that would ever allow them to be sued for climate change.
> Oil is only that important because the industry has actively prevented alternatives from being developed. If they had been more forward-thinking, then oil wouldn't be that important and we wouldn't have all our eggs in one basket.
Not sure about that. Traditional oil production yields massive net energy gains. There's a lot of net energy from solar, but w/o the convenience of a liquid that can be burnt in day or night, and stored for a while.
> Well, I certainly do. Are you saying that I'm not in my right mind? Let's be more polite here, please.
> They are not being sued because they sold oil. They are being sued because they lied about the known health risks associated with buying their oil.
I only read the NYT article. Did you read some other source? The only time "health" is mentioned is in a tobacco comparison.
I'm curious where you draw the line here. You must acknowledge that the price of gasoline, for example, is subsidized by the public dealing with its side-effects. Asthma, acid rain, acidification of the oceans, global warming, etc. are all side-effects that have costs associated with them. These costs are paid by you and I—not Exxon-Mobil. Why do you think it would be unreasonable, assuming Exxon-Mobil is guilty of spreading misinformation, for them to cover some of these costs?
If Exxon-Mobil is guilty of falsifying information, they should be held accountable. Period. Whether other companies are also guilty is of no consequence to Exxon. They should be held responsible as well.
Defining climate change as a "health risk" is insane, sorry. If we go down that road, any policy someone doesn't like could be defined as a "health risk" by a sufficiently creative and unscrupulous debater. Legalize drugs? Health risk because of more addicts. Oppose mass surveillance? Health risk because of injuries from crime and terrorist attacks. Favor green energy? Health risk due to poisonous materials used in manufacturing solar panels. Et cetera.
Please at least be honest about this. People like the NYAG are unable to get their agenda through democratically, so they're going to sue their way to victory instead.
Exxon isn't being sued because oil is a health risk. Exxon is being sued because the argument is that they new it was a health risk, and took deliberate steps to hide that information from the shareholders and the public. Just like when car companies get sued for hiding information about safety problems, they are getting sued for hiding the information, not because people get hurt in car accidents.
Gonna stop you right there, because I was objecting to the whole absurd idea of defining oil as a "health risk." If you want climate change policies, just argue for the policies, don't try to slip them in through the back door by redefining the problem as something else.
So far in this thread, I've been called "insane" and "out of my right mind". I really wish HN were more polite, this kind of language is toxic to having a good discussion.
Climate change is certainly a health risk. Already there have been numerous issues with fresh water access in developing countries due to local climate change that is largely caused by human activity. Lack of fresh water is a health risk. There are numerous other health risks associated with a changing climate, and it is certainly not "insane" to think that's true.
a) "Local climate change" that is "largely caused by human activity" is not what we're talking about here.
b) If something causing issues with fresh water access is enough to define it as a "health risk" then every natural or human-caused disaster in the history of the world is a "health risk" and the term is meaningless.
c) If we can define any problem worldwide as a "health risk" and on that basis sue anyone who disagrees with our evaluation or recommended policy, that's a recipe to legally shut down any argument.
What are the known health risks associated with buying their oil? I think my life is better now because I and people bought their oil and refined it into gasoline, and products that I use.
On the other hand, funding climate denial groups to put off the inevitable reckoning so they could make as much money as possible selling fossil fuels was morally repugnant. We're decades farther down the global warming road than we had to be, so the cost in life and dollars to un-fuck the planet is much greater than it had to be. And it won't be Exxon picking up the tab.
Prosecution is part of how the government solves it. Regulating companies is a fundamental lever goverment uses to effect change.
I never said it wasn't important.
> Also, regulation and taxes are different from prosecution.
Prosecution is the enforcement of regulation. Without prosecution, there is no regulation. (Or taxes, for that matter.)