ExxonMobil reminds me of the Brooklyn Dodgers – or perhaps a better modern-day metaphor would be the Chicago Cubs (with apologies to my colleague Chuck Dolce). They always seem to find a way to steal defeat from the jaws of victory.
At yesterday’s ExxonMobil annual meeting in Dallas, several shareholder resolutions were defeated that, if adopted by a forward-thinking board, could mean a much brighter future for this antiquated company.
As it is, ExxonMobile, the world’s largest oil & gas producer by market value, risks becoming a footnote in history. This is a company that had everything going for it, including record profits... and blew it, by refusing to change its old ways of doing business.
Global energy markets and sources of new supply will change radically in the next several decades. It looks to me like Exxon is hell-bent on getting left behind!
Of course one of the proposals defeated yesterday called for Exxon to adopt an alternative energy policy. The firm is one of the few major oil & gas companies that don’t invest a dime in bio-fuel, solar, or wind power.
This quote from ExxonMobil’s CEO Rex Tillerson says it all about the firm’s backward thinking: “Twenty-five or 30 years from now, the world is still going to have to use oil and natural gas, whether people like it or not, that's a fact.”
How about trying this on for size Rex: 25 or 30 years from now, Exxon will find itself completely shut out of the most promising global oil & gas reserves... as OPEC, Russia, China, Brazil, Venezuela, etc, etc, TOTALLY CUT big U.S. oil companies out of the picture.
Tillerson was proud to point out that Exxon plans to spend $68 million a day this year exploring for new oil reserves... and presumably NOTHING on alternative energy. In reality, Exxon’s total R&D budget amounts to less than 0.2% of last year’s revenue.
Almost NONE of that will be spent on alternative energy research, even though this is clearly key to the future growth of the energy sector.
Peter O'Neill, a great-great grandson of John D. Rockefeller, founder of Standard Oil, had this to say: “All of Exxon Mobil's acknowledged strengths are no guarantee it will remain flexible and visionary in light of the changing energy realities.”
They just don't get it – the energy industry is changing in profound ways – but Exxon refuses to change with it. They may as well diversify into buggy-whip production, or textile manufacturing.
P.S. ExxonMobil may have its head firmly planted in the sand, refusing to see the market-shock changes taking place in the energy sector, but not me. I have been doing extensive research on the most promising, and profitable companies that are committed to alternative energy solutions.
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