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> The focus includes the company’s activities dating to the late 1970s, including a period of at least a decade when Exxon Mobil funded groups that sought to undermine climate science. A major focus of the investigation is whether the company adequately warned investors about potential financial risks stemming from society’s need to limit fossil-fuel use.

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?




There's an interesting phrase that is supposedly thrown around at hedge funds and major financial institutions when bonus time rolls around: IBGYBG - I'll be gone, you'll be gone.

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.


> they rationally chose the latter

That's the kind of "rationality" that would end up with the whole world in a smoldering pile of ruins.


And that's the problem with systemised bad incentives.


this is why technological immortality will make our society more moral.

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.


Yes. Let's wait for a pipedream to start doing things morally.


Yep, and that's where we're heading.


Welcome to modern capitalism where regulations are bad and long term survival doesn't matter.


Why didn't Kodak pivot to digital cameras when it invented them in 1975? Why didn't Barnes and Noble move into the online retailing business in the late 90's? Fear of cannibalizing your own business. Shaking the status quo. Oil companies have had a long and great run that will continue for some time. It's a scary thing to move away from your core competency. Many companies have fallen victim to failures to pivot. That's why pivoting has become one of the hallmark's of lean processes.


> It's a scary thing to move away from your core competency.

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.


>But instead, they are a crumbling company...

What are the best indicators that Exxon is a crumbling company?

http://finance.yahoo.com/echarts?s=XOM+Interactive#symbol=XO...


Their business model was to drill holes in the ground, pump stuff out, heat it up and separate it into various liquids, then sell them. Sure, they should have just started making solar panels and wind mills. And had they done this 40 years ago, they should have been sued by their shareholders. Oil is still going strong -- they would have lost their pants.


> And had they done this 40 years ago, they should have been sued by their shareholders.

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.


> > Oil is still going strong

> Oh really? It doesn't look that way to me.

What are you looking at that indicates otherwise?


I'm looking at climate change as a global event that indicates otherwise. Saying that oil is going strong is like saying that the gang running through the streets breaking windows is making the window business strong.

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.


You're confusing two different concepts. "Going strong" means it's quite lucrative to sell oil. Which it is.

> 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?


Even if somehow tomorrow, all the cars on the road switch to a power source that had nothing to do with petroleum, we would still need loads of oil. Petroleum is a raw material input for many necessary products in our day-to-day lives: plastics, textile fibers, lubricants, medicines, asphalt.


> we would still need loads of oil

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.


And we might well have invested more in nuclear power if they were making more realistic energy decisions.


"Crumbling" might be a bit much, considering they are still one of the largest and most profitable companies in the world. To me that sheds some insight into why.


The board and c-suite executives do not give a fuck about where the company is going to be 40 year from now.

They care about short term profit.


Exxon Corporate Strategic Research has multi-decade project timelines. They are absolutely interested in the next 50+ years.


For the same reason if they had to change, oil companies would rather go into the hydrogen fuel business for hydrogen cars than in the battery-making business for EVs - the less they have to change their practices and infrastructure, the better (from their point of view).

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:

http://www.amazon.com/Innovators-Dilemma-Technologies-Cause-...


If you told them in 1975 that they'd be one of the biggest companies in the world in 2015 if they didn't change much, the smart play would have been to continue on the same path, not dive in to renewables.

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?


There are a lot of cars on the road and planes in the air.

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.


People like to get their money sooner rather than later. 40 years ago it was probably not a big focus for the people running Exxon to potentially get a lot richer 40+ years in the future, but rather being busy getting "rich enough" in the next few years.

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.


"Why" is covered pretty extensively in the Innovator's Dilemma and Solution. I highly recommend those books!


Plenty of companies never pivot even facing demise. Some didn't manage the simple stuff, like analog photography to digital.

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.


> 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?

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.




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