ExxonMobil: Global warming is real, but . . .
Yesterday's New York Times reported that the CEO of ExxonMobil Corporation (NYSE:XOM), Rex Tillerson, gave a speech in which he recognized that global warming is real. He is quoted as saying, "The risks to society and ecosystems from climate change could prove to be significant." This represents a major change for ExxonMobil, which under former CEO Lee Raymond was famous for dismissing the very idea of climate change -- and for funding skeptics in science and mass media to muddy the waters of the debate.
This recognition of global warming does not, however, mean that ExxonMobil plans on doing anything about it. To the contrary, Tillerson argues that while climate change is real, there is a lack of agreement on what effects it will have. "Nobody can conclusively 100 percent know how this is going to play out." And since the effects cannot be foreseen with 100 percent certainty, the best course may be to do nothing, at least for now. At a minimum, new environmental policies must be weighed against the economic costs they create. Tillerson made it clear that those costs could be substantial, and that as a result, oil would -- and should -- continue to be the world's leading energy source for the foreseeable future.
The greatest danger, according to Tillerson, is damaging the global economy as we try to reduce carbon dioxide levels. As far as ExxonMobil is concerned, hydrocarbons will continue to dominate the world's energy needs for decades to come. No other energy source can do the job. Tillerson dismissed ethanol as "moonshine," and said that while alternative fuels may play an important role in the future, ExxonMobil will not be involved in creating them. "There is really nothing I see Exxon can bring to this. We don't see a direct role for ourselves."
This raises some interesting questions about both global warming and energy sector investing. By all accounts now, global warming is real, and its effects could be devastating. (Sorry, polar bears.) But ExxonMobil, like all the other oil companies, doesn't plan on creating alternatives any time soon. In fact, it seems that Exxon plans on holding on to the global energy system for as long as possible -- which may be a very long time, given the rising demand in India and China. That suggests that the profits, like the oil, will continue to flow, no matter how hot it gets on our little planet. And this means that, not for the first time, there may be a contradiction between making money and taking care of ourselves (and everything else) in the long run.
This recognition of global warming does not, however, mean that ExxonMobil plans on doing anything about it. To the contrary, Tillerson argues that while climate change is real, there is a lack of agreement on what effects it will have. "Nobody can conclusively 100 percent know how this is going to play out." And since the effects cannot be foreseen with 100 percent certainty, the best course may be to do nothing, at least for now. At a minimum, new environmental policies must be weighed against the economic costs they create. Tillerson made it clear that those costs could be substantial, and that as a result, oil would -- and should -- continue to be the world's leading energy source for the foreseeable future.
The greatest danger, according to Tillerson, is damaging the global economy as we try to reduce carbon dioxide levels. As far as ExxonMobil is concerned, hydrocarbons will continue to dominate the world's energy needs for decades to come. No other energy source can do the job. Tillerson dismissed ethanol as "moonshine," and said that while alternative fuels may play an important role in the future, ExxonMobil will not be involved in creating them. "There is really nothing I see Exxon can bring to this. We don't see a direct role for ourselves."
This raises some interesting questions about both global warming and energy sector investing. By all accounts now, global warming is real, and its effects could be devastating. (Sorry, polar bears.) But ExxonMobil, like all the other oil companies, doesn't plan on creating alternatives any time soon. In fact, it seems that Exxon plans on holding on to the global energy system for as long as possible -- which may be a very long time, given the rising demand in India and China. That suggests that the profits, like the oil, will continue to flow, no matter how hot it gets on our little planet. And this means that, not for the first time, there may be a contradiction between making money and taking care of ourselves (and everything else) in the long run.











Reader Comments (Page 1 of 1)
2-15-2007 @ 11:01AM
f. p. clay said...
To say that research on "global warming" is clouding the issue since "every one knows that it is not only real but we know the cause" is very poor science. No scientists stops studying a phenomena, because no one knows all the facts about any natural phenomena. After all the concensus of "all scientists" in 1890 was that all the facts of nature were known, and that all we needed do in the future was make more accurate measurements of physical constants. Several years later it was shown that most of what we "knew" was wrong.
2-15-2007 @ 12:10PM
Dr. Plante said...
When a scientist adds two, unfamiliar chemicals together, s/he generally do not add them together in large quantities for fear of what could happen. Caution is a good thing. Adding huge and unnatural amounts of CO2 into the atmosphere is simply wreckless. Those citing economic reasons lack the foresight that if agriculture fails, weather becomes more unstable and extreme, there will be far more economic damage. If a new industry is created that will supply renewable energy is created, there will be new jobs, and Americans can actually buy something that is American (not Saudi, Venezualan, or even Chinese). Money would stay in this country. That sounds more like an economic advantage.
The natural range of atmospheric CO2, over the past 800,000 years was between 180 and 280 ppm. Today, we are at 381 ppm and this concentration is increasing 60-fold faster than the normal, maximum rate over that same time period. See: http://news.bbc.co.uk/2/hi/science/nature/5314592.stm
for further reading.
Exxon's standpoint is a dangerous one, posing a risk to everyone on the planet, all for a sweet profit. Yes, no one knows what will happen, as we are in uncharted waters- but why make it worse by ignoring it? The weather is already changing- where will it be 20 years from now?
Conservation is important:
CFL's, composting, efficient cars, clothes lines, rakes, reel mowers, solar hot water, and now solar electricity is becoming affordable: http://www.jointhesolution.com/mplante They are stating that panels can be installed, starting next year (2008), without the $40,000 financial investment.
All of this technology is available, we only need to start using it, and stop buying fuel from Exxon-Mobil. I have only bought 3 gallons of their product in the past 5 years. They will notice that, and possibly rethink their shortsighted policy.
2-15-2007 @ 5:07PM
DIZZYPIGFARM said...
MMR, RAINEY, YOU MIGHT DO SOME READING ABOUT BOB GIEGENBACK, A PROFESSOSR AT THE UNIV. OF PENN. ON THE SUBJECT OF GLOBAL WARMING. IT IS CERTAINLY HAPPENING BUT HE SEEMS TO TAKE A MORE MIDDLE OF THE ROAD OF THE ROAD APPROACH BY GOING BACK IN HISTORY THOUSAND AND THOUSANDS OF YEARS. HE MIGHT HAVE SOME GOOD POINTS, QUANNAH
2-15-2007 @ 3:29PM
stephen holben said...
The facts are that there are simply too many uncontrolable variables (including cosmic radiation) for ANYBODY to say with ANY investable certainlty that man has any effect on climate. Giving Al Gore the Nobel prize isn't going to change that, nor will all the babbles of Suzanne Sarandon, Barbra Striesand and that crowd. Now if somebody want to start investing in "doing something about global warming" it has to follow the first rule of reasonable investing. I has to have payback. That can only come from perceived value by that good old Great Equalizer...the consumer.
2-15-2007 @ 3:49PM
Dr. Plante said...
Cosmic radiation and reduced cloud cover is what Mr. Holben is mentioning. Yes, reduced clouds can allow more heat to the surface. However, what is never mentioned is what happens during the night: clear nights are always colder than cloudy nights, because heat can more easily escape without the clouds. As a result, there is no significant, net effect for any decrease in cloud cover.
The sun has also not (coincidentally) gotten hotter/brighter, coincident with our high CO2 concentrations and greater temperatures.
If cosmic rays and/or a hotter sun were the reason behind our greater temperatures, why has this caused atmospheric CO2 to increase?
2-15-2007 @ 7:25PM
DIZZYPIGFARM said...
in comment above, number 5, I have misspelled the name of the Univ. of Penna. dept of earth and enviromental studies professor. the correct spelling is Bob Giegengack. sorry and thanks, Quannah
2-15-2007 @ 11:12PM
D.Abrams said...
EXXON-Mobil agrees global warming is real as most every knowledgeable person knows. Whether or not that is a serious problem or whether or not as humans we can do anything about it remains unanswered.Mars is having the same problem which would seem to indicate the Sun is the problem.Overreaction is the biggest potential problem.
3-03-2007 @ 6:19AM
Per Strandberg said...
One factor that variation on cloud cover does from changes in the cosmic is to change the concentration of water vapour which also affect night temperatures. Most climate scientists have only studied thermodynamics and meteorology and because of that favor greenhouse gases as a cause for global warming. They are very good at lobbying. How many look at the actual data http://www.global-warming-and-the-climate.com