In a move on Wednesday that didn’t surprise industry analysts, the shareholders of the two largest oil companies resoundingly said no to proposals that would have put climate change experts on Exxon and Chevron’s boards and impose unrealistic goals on cutting carbon dioxide (CO2) emissions from their products. Exxon’s CEO also remarked that investing in renewable energy is akin to losing ‘money on purpose.’
This isn’t the first time that activists, embedded in big oil as shareholders, have tried to steer the companies into unprofitable waters with meaningless gestures. With crude oil prices at all-time lows due to vast improvements in fracking, profits at the largest oil producers are modest at best. Exxon’s CEO Rex Tillerson told shareholders that the company is well positioned to withstand the fluctuations in oil prices and still produce a return on their investments. He also said the company does not intend to lose money by investing in renewable energy. Something Tillerson may have gleaned after seeing Al Gore’s un-green corporate investment portfolio.
Tillerson forecasts that the next two years will be particularly difficult because of the vast supplies of oil on the world market and the anemic economic growth that’s been persistent for the past six years. The explosion of new wells from fracking is also adding to big oil’s woes, as more oil is flooding the market and driving prices down. With ISIS selling millions of barrels of crude on the black market to finance its Middle East takeover, oil prices have dropped in lockstep. Exxon believes that cost-cutting measures and a reduction in capital spending will help it remain profitable and is adjusting itself accordingly.
Shareholders also rejected a proposal by a Catholic Priest organization from Milwaukee to put a ‘climate change expert’ on the board of directors. Exxon’s board opposed the idea saying it had “several board members have engineering and scientific backgrounds and can handle climate issues.” The proposal garnered only 21 percent support and the outcome of that proposal was similar at Chevron’s board meeting.
According to the Missoulian, Michael Crosby, who sponsored the resolution at Exxon’s meeting, said the company is too focused on oil and gas and should be more focused on renewable energy and climate change. “This company has to be making plans for the future,” he said. “Let’s get an expert on the board to deal with a critical question.”
Worse still for activists, less than 10 percent of the shareholders at Exxon and Chevron thought proposals for reducing CO2 emissions from its products was important. Vermont’s state treasurer Beth Pearce believes institutional stakeholders are growing more concerned about the topic, and thinks Exxon’s strategy is “wholly inadequate.”
Tillerson also noted that the computer models used to predict the effects of global warming haven’t been very good and it would be “very hard” to meet the aggressive CO2-reduction targets that environmentalists are clamoring to have put in place.
In fact, an April 2015 study published in the peer-reviewed journal ‘Scientific Reports’ revealed that global warming was not progressing at the rate suggested by the worst-case computer models released by the Intergovernmental Panel on Climate Change (IPCC). The study examined 1,000 years of temperature records and it showed global warming was not progressing as fast as it would even under the most severe emissions scenarios as outlined by the IPCC.
The Exxon CEO said that technology can help the world cope with any foreseeable sea level rise “that may or may not be induced by climate change. Mankind has this enormous capacity to deal with adversity,” Tillerson said, noting that his answer may likely be an “unsatisfactory answer to a lot of people.” When asked at the meeting why Exxon doesn’t invest in renewable energy, Tillerson replied, “We choose not to lose money on purpose.” Shareholders at the meeting then broke out into thunderous applause.
Exxon made “$32.5 billion last year, down less than 1 percent from 2013, even though oil prices had fallen by half as much in late 2014.” The first quarter of 2015 showed Exxon dropping “46 percent when compared to the same period in 2014,” but still earning $4.9 billion. Both companies lost shares when the markets closed on Wednesday.
Stuart Varney, host and analyst of Fox Business’ Varney & Company, appeared on Fox News Channel this morning and reported that Exxon is also lobbying Pope Francis ahead of the looming climate encyclical expected to be released ahead of the U.N. Paris Climate talks, in which President Obama has promised the U.S. will make massive CO2 cuts even though China and India have opted out of this ‘treaty.’