Book Review: Private Empire – ExxonMobil and American Power by Steve Coll

If you were expecting Private Empire, the latest book by two-time Pulitzer Prize winning author Steve Coll, to serve as a hit piece on ExxonMobil (and 'Big Oil' in general) you’ll be somewhat disappointed.

For anyone unfamiliar with his previous work, Steve Coll’s earlier books include the highly recommended Ghost Wars, arguably the definitive geopolitical account of the activities of the CIA and other national intelligence agencies in Afghanistan and Pakistan from the time of the Soviet invasion up to the eve of the 9-11. Ghost Wars won the Pulitzer Prize in 2004 for general non-fiction and was one of the books a newly elected President Barrack Obama was reported to be reading upon entering office.

Steve Coll describes in an interview with Charlie Rose what lead him to want to write Private Empire and how his original idea for the book was to tell a broader story about the oil industry in the style of Daniel Yergin’s The Prize. He soon realized, however, that he needed a central character and Exxon was for him the only logical choice.

Coll’s portrait of Exxon begins in March 1989 with the Exxon Valdez oil spill in Prince William Sound, Alaska, an event which made the company the most reviled in the United Sates. The book’s timeline spans the subsequent transformation of the company, which was led by CEO Lee “Iron Ass” Raymond, up through its present day stewardship by current CEO Rex Tillerson. Along the way we learn a great deal about Exxon, including its somewhat peculiar cult-like corporate culture, its blockbuster merger with Mobil, its controversial stance and efforts on global warning, the access it enjoyed to political leaders such as Vice President Dick Cheney, its somewhat misleading approach to reporting oil reserves, and the company’s record setting financial success. The book in fact makes for a compelling business case study and students of business history, strategy and management will find much of interest.

The most interesting sections of the book are the ones detailing ExxonMobil’s operations in some of the world’s most politically unstable regions. ExxonMobil’s bread and butter business is to invest billions of dollars drilling holes in the ground in countries like Equatorial Guinea and Chad and then spend the next 30-40 years working to make sure that nothing interrupts the company's return on investment. Coll’s account of the 2004 attempted coup in Equatorial Guinea by a group of British and South African mercenaries, who were supported from some elements within the Spanish government, is one of the most fascinating stories in the book.

Continue reading the full review here.

Video: Alex Salmond's LSE Talk on Scottish Independence

Below is the video, and the podcast can be heard here. Salmond makes a pretty persuasive case and I wouldn't be surprised if, given enough time to make it, we see an independent Scotland someday.

Speaker(s): Alex Salmond MSP
Chair: Professor Paul Kelly

Recorded on 15 February 2012 in Sheikh Zayed Theatre, New Academic Building.

Alex Salmond is the first minister of Scotland. He was born in Linlithgow in 1954. He attended Linlithgow Academy before studying at St Andrews University, where he graduated with a joint honours MA in Economics and History. He became the first ever SNP First Minister of Scotland in May 2007 and won the Aberdeenshire East constituency at the May 2011 election, when the SNP won a majority of seats of in the Scottish Parliament. MSPs re-elected him unopposed for a second term as First Minister on May 18 2011.

The Great Hope - An Update on the Holy Grail of Clean, Limitless Energy

Good story from the Guardian on the state of fusion research here.

While economically viable fusion may be decades off at the current low relative level of investment, it's good to see the world's great geopolitical powers working together:

Last year, bulldozers began clearing land 60km north-east of Marseille in southern France. By 2019, it is hoped that the world's largest and most advanced experimental tokamak will be switched on. The €15bn International Thermonuclear Experimental Reactor (ITER) is being funded by an unprecedented international coalition, including the EU, the US, China, India, South Korea and Russia.

h/t Tyler Cowen

A Reason for the Americas to Be Optimistic

In the words of the author, "adios, OPEC".

The Americas, Not the Middle East, Will Be the World Capital of Energy

Was putting a man-on-the-moon peculiarly un-American?

First-image of ISS docking by a soon-to-retire U.S. space shuttle

The Economist has an interesting read on the 50-year anniversary of President Kennedy's speech which set a goal of putting a man-on-the-moon within a decade.

Here's the key excerpt:

He (Kennedy) set out to make America’s achievements in space an emblem of national greatness, and the project succeeded. Yet it did not escape the notice of critics even at the time that this entailed an irony. The Apollo programme, which was summoned into being in order to demonstrate the superiority of the free-market system, succeeded by mobilising vast public resources within a centralised bureaucracy under government direction. In other words, it mimicked aspects of the very command economy it was designed to repudiate. 

That may be why subsequent efforts to transfer the same fixity of purpose to broader spheres of peacetime endeavour have fallen short. If we can send a man to the moon, people ask, why can’t we [fill in the blank]? Lyndon Johnson tried to build a “great society”, but America is better at aeronautical engineering than social engineering. Mr Obama, pointing to competition from China, invokes a new “Sputnik moment” to justify bigger public investment in technology and infrastructure. It should not be a surprise that his appeals have gone unheeded. Putting a man on the moon was a brilliant achievement. But in some ways it was peculiarly un-American—almost, you might say, an aberration born out of the unique circumstances of the cold war. It is a reason to look back with pride, but not a pointer to the future.

Barring a crisis or existential threat, are the prospects for the U.S. undertaking an ambitious, focussed transition to a sustainable energy based system, or an affordable healthcare system, extremely remote?

In short, was the U.S.'s Race to the Moon success, as The Economist puts it, a 'glorious one-off'?

Refreshingly Candid U.S. Senator Graham On Clean Tech, 'Polar Bear Politics', and Why Cap & Trade is DOA

U.S. Senator Lindsay Graham

I'm not sure whether there is something unusual about London or the LSE which triggers frank discourse from U.S. policymakers, or if honest talk is simply de rigueur for policymakers when they venture abroad.

Regardless, I highly encourage you to listen to this talk and Q&A from U.S. Senator Lindsay Graham. He speaks plainly about the the politics of climate change, what a big kick in the pants $5/gallon gasoline is for pols, and how the U.S. can prevent being left behind by China in the race to develop next generation clean technologies.

For more about Graham here is a NY Times Magazine piece from last year, and below is his bio:

Lindsey O. Graham was elected to serve as United States Senator on November 5, 2002. He serves on five committees in the U.S. Senate: Appropriations, Armed Services, Aging, Budget and Judiciary. A native South Carolinian, Graham grew up in Central, graduated from D.W. Daniel High School, and earned his undergraduate and law degrees from the University of South Carolina in Columbia. Graham logged six-and-a-half years of service on active duty as an Air Force lawyer. From 1984-1988, he was assigned overseas and served at Rhein Mein Air Force Base in Germany. Upon leaving the active duty Air Force in 1989, Graham joined the South Carolina Air National Guard where he served until his election to the U.S. House of Representatives in 1994. During the first Gulf War, Graham was called to active duty and served state-side at McEntire Air National Guard Base as Staff Judge Advocate. He received a commendation medal for his service at McEntire. Since 1995, Graham has continued to serve his country in the U.S. Air Force Reserves and is one of only three U.S. Senators currently serving in the Guard or Reserves. He is a colonel and is assigned as a Senior Instructor at the Air Force JAG School.

Video: Animated Visualization of Japan's Nuclear Meltdown

Video: On Why Becoming More Energy Efficient is Simply Not Good Enough

"Like salt, we need to strip oil of its strategic importance."  

-Gal Luft, Executive Director of the Institute for the Analysis of Global Security and a founder of the Set America Free Coalition

As Luft points out in this brief video the buzzterm 'energy independence' cannot simply be achieved in the U.S. by more domestic drilling for oil in areas such as the ANWR.

The word 'independence' implies choice, and when it comes to an energy source for automobiles the vast majority effectively have zero choice.

For a long time now oil has had a monopoly as THE energy source used in vehicle transportation, and we must find a way to put an end to oil's stranglehold.

Luft's and coauthor Anne Korin's book, titled Turning Oil into Salt: Energy Independence Through Fuel Choice, argues for the importance of making oil as un-strategic a commodity as salt has become.

Many have forgotten or never learned that wars used to be fought over salt. The 'primordial condiment' as some have called it was one of the most effective ways to preserve food, making it perhaps the world's most strategic commodity.

Nissan Leaf

Today we no longer fight wars over salt because it has been rendered non-strategic. We must do for oil what we did with salt. The good news is that for oil we have right now the technological equivalent of canning and refrigeration, which put an end to the strategic importance of salt. One of the keys to reducing oil's strategic importance is the wide adoption of 100% electric (not hybrid, fully electric) vehicles such as the Nissan Leaf.

Their book can be found in the Good Books and Films section on the right side of this blog.

The Key Reason Electric Vehicles Matter

While most of a recent Seeking Alpha article titled 'Plug-in Vehicles and Their Dirty Little Secret' with 444 comments and counting is correct, there's a lot more to the electric vehicle story than the author's focus on emissions would lead the reader to believe.

EV Emissions and the Present and Future Grid

From an emissions perspective, running your car on electricity is about 25% cleaner than a standard car that gets about 25 mpg. But compared to a hybrid that gets more like 45-50 mpg, electric cars produce more emissions (e.g., carbon).

It's also true that more charging will likely occur at night, when the power produced is more heavily coal-weighted. However, while charging at night is worse from an emissions perspective it is much better from a grid stability and grid transmission perspective.

It's also worth noting that the mix of generation sources that provide power to the grid is changing - it is getting cleaner. Coal's share of the gird (in the U.S.) has gone from ~55% in the late 1980s to ~45% today. This trend will continue, especially as the U.S. continues to retire many of its older coal plants and replaces them with natural gas power plants, and more wind/solar.

The Environmental Protection Agency continues to tighten emissions regulations on power plants, so even newer coal plants (the few that will get built) are much cleaner and more efficient than the current ones. So using today's grid mix in assessing EVs ignores the improvement in emissions we'll be seeing in the future as the grid becomes cleaner.

How Much Do Electric Cars Really Cost?

There is one misleading remark the author makes on cost: in many cases running your car on electricity is actually cheaper than gasoline. $3.00/gal gasoline for a car that gets 30 mpg = $0.10/mile. If that car ran on electricity, it would get about 3 miles / kWh, and so for an electricity cost of $0.12/kWh (the US average), that works out to only $0.04/mile, or 60% less.

But this is only one example. Californians pay a lot for electricity, so it could be more expensive to run the car on electricity. Note: PG&E is working on rate structures that make it cheaper to charge at night, thus helping improve the economics for electric cars.

However, the cost of battery packs is expensive, so if you amortize the cost of the battery pack over the lifetime mileage of the pack, then that cost/mile obviously goes up for EVs. But is it really fair to do that? Do we similarly amortize the cost of a gasoline engine, fuel system, tank, etc? No. But without question, these battery packs are expensive, so the costs of the cars will be higher.

Why Electric Vehicles Truly Matter

So what's really behind all this fuss about rechargeable cars? If it's not about saving money, and not about reducing emissions, then what's left?

Energy security.

The biggest challenge our worldwide energy system faces is the near complete monopoly that oil has on the transportation sector. We heat our homes using a variety of energy sources. We make electricity using a variety of energy sources. But when it comes to the 3rd category of energy consumption (transportation) it is essentially all oil.

And making things worse is the fact that the U.S. imports about 2/3 of its oil, and 40% of those imports come from OPEC. This is not a very encouraging situation for whole host of reasons and warrants a separate article.

Hybrids help reduce oil consumption, which is obviously good for reducing emissions, fuel costs, and it helps reduce dependence on oil imports. But it does little to break oil's monopoly on the auto and overall transportation sector.

We need to find alternatives to oil, and the longer we wait the more painful it will become.

(Note: for more information on electric vehicles check out MIT's EV team page here and this recent report from the MIT Energy Initiative.)

Video: The Daily Show on "An Energy Independent Future"

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
An Energy-Independent Future
www.thedailyshow.com
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