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ExxonMobil: The Kiss of Death?
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Yesterday, May 28, 2008, may become a day of true significance for ExxonMobil, as Exxon's shareholders voted against pursuing alternative fuels and making the transition to becoming a green company. The largest company in the Americas, worth nearly $500 billion according to the stock market today, not only shot down proposals to enter the alternative fuels market, reduce greenhouse gases, or appoint a chairman independent of the company CEO, one of the key attendees proposed "a prohibition on shareholder resolutions such as (these)" and was met with cheering. Who was Mr. Milloy's statement pointed at? Neva Rockefeller Goodwin, a Tufts economics professor and a great-granddaughter of John D Rockefeller, founder of Standard Oil, which was split into 34 companies in 1911 because of its monopoly. Two of those companies were Exxon and Mobil.
This is the best part of the whole article:
Those calling for public action against greenhouse gases are practicing "junk science," Milloy asserted, and ExxonMobil should steer clear of renewable fuels. "Exxon sells gas," he said, "not moonshine."
I'm not sure Milloy and his colleagues have been reading the same articles I have lately, nor am I sure they have studied history, or at least heard the phrase "Those who fail to learn the lessons of history are doomed to repeat them." (George Santaya, I believe) Studying history is pointless if you have no intention of learning from it, after all.
Take a look at GM and Ford - especially Ford, who has dropped a few nuggets of knowledge recently. Both companies rode the American wave of bigger is better - trucks, SUV's, and cars oozing muscle wooed Americans in such a way that caused automakers to produce bigger vehicles with worse gas-mileage. Gas was cheap and people were sprawling out past the suburbs into quaint towns, willing to cope with long commutes to and from work in heavy traffic to own a bigger house in the middle of nowhere. In recent years there were warnings - companies finding fewer new oil fields, demand increasing as other nations developed, especially China, and a push for heightened environmental standards - that they ignored, believing the good times would be here forever (riiiiiiiiiiight).
Ford plans to lay off 10-12% of their salaried workforce as they project lower sales and a major shift in what Americans are looking for in their next car, causing a major overhaul in their production needs and future developments. From the second article:
Ford now believes that the change in vehicle choice is structural, not cyclical, Mulally said.... "I think it's a concession to reality," said auto analyst David Healy of Burnham Securities. "General Motors has done the same thing, just not with the publicity. Chrysler has been quietly cutting production. But it's a good idea to get all the bad news out at once."
I heard a report on the radio yesterday that women think a man driving a Prius is sexier than a Porsche because he's a more intelligent, thoughtful, and interesting guy, and nearly half of all women surveyed stated they are turned off by guys driving Hummers and SUV's. Looks like Borat was led astray in his search for a pussy magnet.
Speaking of the Prius, Toyota's earnings are down and projected to be lower in 2008 than initially thought. Even in this economy, with a strong yen vs a weak dollar, they're still raking in the dough, and analysts think Toyota's being a little modest. Toyota embraced changing times much faster than America's automakers, staying true to their original plan of getting a little better at everything each year until their cars cost less and lasted longer than the competition.
Still think ExxonMobil is doing the best thing for their shareholders in the long-run? The second largest company in the Americas, Petrobas, a fuel company out of Brazil, worth a tad over $300 million on the stock exchange today after an incredible recent run, produces as much sugarcane-based biofuels for Brazil as they do oil-based fuels. While they are causing a few problems by taking up a considerable amount of land to grow sugarcane, pushing some cattle farmers into the rain forest and preventing food from being grown there, they have garnered considerable attention from major automakers. Petrobas is also looking into making biofuels from castor and palm oil. They're one of the few companies still actively searching out new oil, as they're committed to both short-term needs while not sacrificing long-term vision. Dig deep enough in this article on Ken Heebner, considered to be American's top fund manager, and he talks about how Petrobas has been one of his top picks. Who am I to argue with Heebner? C'mon, the guy nearly cried when Peter Lynch retired because he felt the only fund manager worth competing against was gone; it takes psychotic obsession to do what he does so well.
It's not just the automakers who are interested in biofuels. (T_T is probably quite upset at this point, but bear with me buddy) As airlines go through cash reserves like water, they're looking to less expensive biofuels as a way to drive costs back down. (Linked to page 2, scroll down) Mind you, this is not something that will make an immediate impact, but it could be the only way flying stays affordable for most people, or even returns to some semblance of what we Americans have grown used to.
Maybe all this hoopla will blow over, the oil will flow and we'll all die laughing at this hiccup. And maybe ExxonMobil will get their own BudLight "Real Men of Genius" spot a decade or two down the road.
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