My Investor’s Business Daily op-ed about my ExxonMobil shareholder proposal to send all climate activist shareholders.
Oil And Climate Alarmism Don’t Mix For Shareholders
By Steve Milloy
May 18, 2017, Investor’s Business Daily
Which is the greater threat to oil and gas industry shareholders — anti-fossil fuel activists dressed in shareholders’ clothing or oil and gas industry corporate management? It’s a question that Exxon Mobil shareholders now have the opportunity to ponder before the oil giant’s May 31 annual shareholder meeting.
Shareholders will vote on the proposal I submitted titled, “Nuisance Shareholders,” which might more descriptively be called the “shareholder proposal to end all political activist shareholder proposals.”
As described in George Washington University professor Jarol B. Manheim’s 2004 book “Biz-War and the Out-of-Power Elite: The Progressive Attack on the Corporation,” left-wing political activists met and decided after the election of Ronald Reagan in 1980 that one way back to political power was to become activist shareholders in publicly owned corporations.
That is, they would exercise the rights and status of shareholders to pressure, if not, capture corporate managements so as to use corporate resources and influence to help achieve their political agenda.
It has been an enormously successful strategy for the activists, especially when it comes to the controversy over climate change. Not only do many of the largest and best-known publicly-owned corporations now openly advocate for climate policies, even oil and gas companies have been pressured into pursuing policies that militate against their own products.
After years of its annual meeting being turned into a circus by fossil fuel-opposing climate activist shareholders and other activist pressure, Exxon Mobil is perhaps foremost among U.S. oil and gas companies that now advocate for government action on climate, and against its own products and the best interests of its own shareholders.
Despite the November 2016 election of a presidential candidate who promised to withdraw the U.S. from the Paris climate treaty, called climate change hysteria a “hoax” and who promised to unleash the U.S. energy industry after eight years of anti-fossil fuel policies, Exxon Mobil management not only openly supports the Paris climate treaty but also supports a “carbon tax.” Both policies are intended to dramatically reduce if not eliminate fossil fuel use.
Some may imagine that Exxon Mobil’s announced climate policy is mere “greenwashing” — i.e., insincere posturing as eco-friendly for public relations purposes. But I take Exxon Mobil management at its word as expressed in deed and to me in negotiations over my proposal. Management believes that the climate is at risk from greenhouse gas emissions and that something needs to be done about it. While that is a perfectly reasonable position to take if you are a climate activist — it is not so reasonable for oil company management.
As Milton Friedman famously wrote in 1970: “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
So businesses serve as society’s wealth generators. They are not governments, charities, or activist groups. When it comes to climate, Exxon Mobil’s job is to create wealth via production and sale of oil and gas — not to participate in the dubious pursuit of returning the atmosphere to pre-Industrial Revolution conditions.
The consequences to investors of oil and gas corporate management’s failing to seriously and effectively fight climate activists is best demonstrated by the recent experience of the coal industry in which I worked for years.
Although climate activists frequently demonize Republican politicians and climate skeptics as being in the pockets of the coal industry, the reality is somewhat different. The coal industry was never a major financial supporter of climate skeptics and generally refused to openly challenge climate science or counterattack climate activists.
The effect of coal industry political contributions was essentially nullified after the 2009-2010 failure of cap-and-trade legislation and President Obama’s subsequent resort to his regulatory agencies. Political contributions produced little in the way of return as Congress could only pass ill-fated bills that President Obama would never sign.
And it is a fact that much of the coal industry actually supported the anti-coal Waxman-Markey cap-and-trade bill in the vain and naive hope that peace could be negotiated with politically-driven coal industry opponents.
The result to shareholders of the coal industry management’s failure to combat its opponents was dramatic. The market value of coal companies declined from $69 billion in 2011 to $4.8 billion in 2016 — a 93% drop in five years. Many large publicly-owned coal companies filed for bankruptcy. When the largest, Peabody Energy, emerged from bankruptcy in April 2017, shareholders had their stock zeroed out.
Exxon Mobil shareholders ought to consider than when they vote on my proposal. Here’s why:
First, Exxon Mobil’s attempted appeasement of climate activists, from its supporting climate policies to refusing to fund climate skeptics, has gotten the company nothing — except an activist-inspired RICO criminal investigation by state attorneys general led by New York’s Eric Schneiderman.
Next, while the world can’t function without oil and gas, the world can function without Exxon Mobil shareholders. Even though coal companies went bankrupt and shareholders were zeroed out, the coal companies nevertheless provided fuel for about one-third of our electricity needs during 2011-2016.
I submitted the shareholder-proposal-to-end-all-proposals once before in 2008. Although the proposal failed, my presentation at the annual meeting was received with thunderous applause. At that meeting, my message was directed at the poseur activist shareholders: “If you don’t like the oil and gas business, get out,” I urged.
It hadn’t quite dawned on me at the time that the message might have been better directed at Exxon Mobil’s management.
Milloy is a senior fellow at the Energy & Environment Legal Institute and the author of “Scare Pollution: Why and How to Fix the EPA.”
@jim
Academics are for hiring to write reports that back up and support your decisions! Any reports down by a so called Scientist, it written to support the Governments decision.
Look at Australia’s Chief Scientist. He writes reports to justify the destruction of the country’s electricity system.
“…so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
The missing element in this Op-Ed? Exxon DID engage in fraud, including paying shills to smear scientists and exaggerate, fabricate and outright lie about the evidence for human-caused climate change. For many, many years.
All deep analysis aside, carbon taxes & carbon capture are a waste of money, resources & time.
There is no good or wise way to do either.
Corporations don’t pay taxes, never have, never will. They collect taxes from their customers. All taxes on energy are paid at the pump or in the form of utility bills.
It was taken for granted that of course the interests of #1 are the major priority……
When it comes to any kind of specialist advice only the hired [academic] ‘experts’ are consulted….
When you’re a self-serving ignoramus in a position of ‘responsibility’ you need to be able to deflect criticism onto an apparent ‘expert’ with as many academic credentials as possible……
“a revenue-neutral carbon tax”
my oh my, someone forgot his history lessons
Every new tax dollar goes either to economically dysfunctional nonsense like windmills and Solyndra or into welfare. All of which are merely pits down which to toss money.
“the politicians only listen to their favorite academics……..”
Actually they tend to listen to their big donors first, their standing with their peers, their own pocketbook, their family & friends, then the voter’s. Last of all, what’s best for the county.
see: http://www.debunkingportland.com/politics.html
Nice explanation , Bill…..I was wondering about the subject raised in comment #1 above Problem is, the politicians only listen to their favorite academics……..
I’m confused at how a revenue neutral carbon tax would help at all? It’s simply a monetary shift from one part to the other where the “sink” party is creating no real value — the only difference is it goes into the hands of a private party, versus a government. It’s simply adding cost to production with no real result other than this monetary shift. The only way it “does” anything is if the resulting behavior is curbed — the raising of the price lowers the consumption. While that happens in theory it doesn’t happen in practice where the consumer goods in question are commodity/casual goods. All that is done is inflation acceleration.
For example, let’s just say it causes a doubling of the price of gasoline. Does that reduce consumption? We’ve seen that very thing happen as a result of OPEC over a number of years and no, it doesn’t cause people to drive or fly less, simply makes it more expensive. The argument that it increases mass transit use — does it? No because you have a startup cost for mass transit to support this and those costs rise as well over time. Not to mention any carbon-tax plan is regressive in nature, which is why I can’t understand why the “progressives” are pushing for it. The things that go up in price is all plastics and fuel/transported goods — so everything. So now the poor, low, and middle classes are paying a higher percentage of their disposable income into this carbon scheme relative to the upper class. I commute to work, my cost increases dramatically — I can’t just up and sell my car if I don’t have money to buy a more fuel efficient (an outlay of 20-30,000 or more). I can’t use mass transit if it isn’t available for my commuter route. Carpool has the same problem as mass transit. I can’t demand my employer raise my salary or that they allow me a telecommute option, how will I flip burgers or replace the failed component in a server in the data center from my home or repair that jet engine for the airline(not all jobs are telecommute-capable)? The net result is less disposable income (assuming there was any) for my family.
The above doesn’t include the well publicized cases of outright fraud in the carbon trading scheme. Company A sells carbon rights in the form of unmodified land to carbon creator B. But A never actually plants any trees. It’s just the same undeveloped land that it always has been. Therefore, it isn’t absorbing any more carbon than it was originally — net/net the atmospheric CO2 equation trucks along unchanged. I know this one well, I have many many acres of undeveloped land that I would instantly sell the pollution rights of were this to come about. The net result is simply i’m now the equivalent of a bondholder to a company receiving money every year for nothing since i’m not doing anything to the land to allow it greater CO2 absorption, I was never going to develop it anyway (it’s in the middle of nowhere, mountain/rocky/etc…it’s just where I go camping), and even quirkier — I can’t maintain it through periodic cutting to keep it from being prone to forest fires because that would change it’s carbon sink characteristics which i’m bound to maintain as my side of the trade! But then, those forest fires are blamed on climate change so that’s ok it’s part of the sales pitch I guess.
The concept of a revenue neutral carbon tax working is one purely at the scholarly/academic level where the back side of the economic equation (behavior will decrease/consumption will decrease) occurs. That may happen for taxes on luxury items (boats, private jets, etc), but not for those on commodity. Turn back the clock and look at the gas guzzler tax which is still out there and collected on cars sold every day — ever wonder where that is going?
I’m confused at how a revenue neutral carbon tax would help at all? It’s simply a monetary shift from one part to the other where the “sink” party is creating no real value — the only difference is it goes into the hands of a private party, versus a government. It’s simply adding cost to production with no real result other than this monetary shift. The only way it “does” anything is if the resulting behavior is curbed — the raising of the price lowers the consumption. While that happens in theory it doesn’t happen in practice where the consumer goods in question are commodity/casual goods. All that is done is inflation acceleration.
For example, let’s just say it causes a doubling of the price of gasoline. Does that reduce consumption? We’ve seen that very thing happen as a result of OPEC over a number of years and no, it doesn’t cause people to drive or fly less, simply makes it more expensive. The argument that it increases mass transit use — does it? No because you have a startup cost for mass transit to support this and those costs rise as well over time. Not to mention any carbon-tax plan is regressive in nature, which is why I can’t understand why the “progressives” are pushing for it. The things that go up in price is all plastics and fuel/transported goods — so everything. So now the poor, low, and middle classes are paying a higher percentage of their disposable income into this carbon scheme relative to the upper class. I commute to work, my cost increases dramatically — I can’t just up and sell my car if I don’t have money to buy a more fuel efficient (an outlay of 20-30,000 or more). I can’t use mass transit if it isn’t available for my commuter route. Carpool has the same problem as mass transit. I can’t demand my employer raise my salary or that they allow me a telecommute option, how will I flip burgers or replace the failed component in a server in the data center from my home or repair that jet engine for the airline(not all jobs are telecommute-capable)? The net result is less disposable income (assuming there was any) for my family.
The above doesn’t include the well publicized cases of outright fraud in the carbon trading scheme. Company A sells carbon rights in the form of unmodified land to carbon creator B. But A never actually plants any trees. It’s just the same undeveloped land that it always has been. Therefore, it isn’t absorbing any more carbon than it was originally — net/net the atmospheric CO2 equation trucks along unchanged. I know this one well, I have many many acres of undeveloped land that I would instantly sell the pollution rights of were this to come about. The net result is simply i’m now the equivalent of a bondholder to a company receiving money every year for nothing since i’m not doing anything to the land to allow it greater CO2 absorption, I was never going to develop it anyway (it’s in the middle of nowhere, mountain/rocky/etc…it’s just where I go camping), and even quirkier — I can’t maintain it through periodic cutting to keep it from being prone to forest fires because that would change it’s carbon sink characteristics which i’m bound to maintain as my side of the trade! But then, those forest fires are blamed on climate change so that’s ok it’s part of the sales pitch I guess.
The concept of a revenue neutral carbon tax working is one purely at the scholarly/academic level where the back side of the economic equation (behavior will decrease/consumption will decrease) occurs. That may happen for taxes on luxury items (boats, private jets, etc), but not for those on commodity. Turn back the clock and look at the gas guzzler tax which is still out there and collected on cars sold every day — ever wonder where that is going?
“Men follow their sentiment and their self-interest, but it pleases them to imagine that they follow reason.” Vilfredo Pareto.
Good thinking, Steve Milloy! Management has lost its sense of direction.
Sorry, a revenue-neutral carbon tax does make sense, if the give-back or tax decrease part of the deal results in more economic stimulation than the carbon tax does damage.