Last week, Exxon Mobil agreed to buy Pioneer Natural Resources for $59.5 billion, in a move widely expected to set off a wave of consolidation throughout the oil sector. Combined, Exxon and Pioneer would be the largest producer of oil and natural gas in the Permian Basin, the field that produces more than 40 percent of America’s oil. If the deal goes through, other companies like Chevron could soon follow suit, buying up smaller companies as they come under pressure from investors to match Exxon’s size.
That consolidation would undermine democracy in the United States, mislead investors and weaken market competition. It should be stopped for all our sakes.
The democratic argument against the proposed deal is simple. In politics, concentrated interests, like rich corporations, have powerful advantages over diffuse interests, like voters, that can distort outcomes and thwart progress. Take climate legislation. A majority of Americans want to see the environment protected, but big companies that pollute heavily have an interest in watering down legislation that might reduce their profits. As a result, progress on energy policy has been agonizingly slow.
Exxon has also taken steps to shape the way voters think about the environment by sowing public misinformation and funding conservative groups disguised as grass-roots organizations. For instance, in July 1977, Exxon’s own senior scientist James Black told senior management that fossil fuels were causing climate change. Publicly, however, Exxon painted a very different picture. Lee Raymond, Exxon’s chief executive from 1993 to 2005, reportedly announced at a shareholders’ meeting, “I’m not convinced that the earth is warming at all.” In 2006, Exxon finally publicly acknowledged climate change risk for the first time, but as recently as 2016, according to a Wall Street Journal article published last month, it was still supporting “research that questioned the findings of mainstream climate science.”
Allowing Big Oil to become Bigger Oil means more money for this kind of research, plus more money for lobbyists, industry interest groups and media advertising, all of which undermines efforts to pass legislation strong enough to meet the world’s climate goals. The cumulative effect of it all on democracy would be so significant that regulators ought to be paying close attention.
A second reason for concern is the yawning gap between what Exxon says to investors and what it actually does. The company said as recently as August that it continues to support the Paris climate agreement. But it also said that the world isn’t on track to reach the targets of the agreement. The Pioneer deal not only seems to be a huge bet to take advantage of that expected failure; it is also a commitment to contribute to the failure. By doubling down on its oil and gas strategy rather than investing in low-carbon technologies, Exxon is actively undermining the agreement that it claims to support.
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