Some Resolutions for Exxon
W.T. Slick Jr., senior vice-president of Exxon Company’s calling for higher profits, lower taxes, and less government involvement in the oil industry.
In a recent speech before business economists, he declared, “Government policy needs to make a turn back to the kind of economics that helped build our country — a turn back to market economics.” In a phrase, Exxon wants to make more money in order to raise more capital and is willing to abide by market forces. For a company which supported both state governments control of oil production for some 40 years as well as the oil import quota from 1959 to 1973 in order to bolster higher domestic gasoline and home fuel prices, Mr. Slick’s call for market economics is at least a turn away from history.
If Mr. Slick is to be believed, he should have the following checklist, perhaps posted on his office wall:
“Exxon resolves to return to market forces by taking the following steps:
“1. Stop all payments to political parties or politicians. Slushing almost $50 million dollars just to Italian politicians and party newspapers between 1953 and 1971 by Exxon could have interfered with market economics.
“2. Drop all joint ventures with other major oil companies here and abroad. Exxon, Texaco, Gulf, Mobil, Shell, Standard of California, Amoco, and Arco should not be in business together, sharing their commercial plans and information, if they wish to compete under market economics.
“3. Cease all product exchange agreements with other oil companies. Regularly swapping oil with each other reduces competition, avoids an open market, and binds the large oil companies closer together. Besides, after spending all that advertising money on the superiority of our brand name, consumers might be upset to learn that it’s another tiger in their tank.
“4. Cease cooperating with other giant oil companies to shore up the OPEC cartel, as Fortune magazine pointed out, by allocating purchase reductions among the producing countries. The Shah of Iran told Anthony Sampson, author of the “Seven Sisters (the seven large oil companies),” that the smooth functioning of OPEC depends on the global machinery of the ‘Sisters.’
“5. Reject all federal welfare payments to the company, whether they are in the form of tax privileges or indirect subsidies to the nuclear industry that will benefit Exxon’s nuclear division. Welfare payments reduce our incentive to work.
“6. Remove Exxon and other major oil companies from ownership of pipelines and other vertically integrated operations which produce anticompetitive forces and insulate the ‘majors’ from market economics.
“Use our (Exxon) testimony before the Wisconsin State Tax Appeal Commission to persuade the other giants in our industry how easy it would be to divest our and their production, transportation, refinery and marketing units. Support Senator Philip Hart’s (D.-Mich.) divestiture legislation which, in Hart’s words, ‘would let the capital market itself measure the performance of each functional entity and to allocate capital accordingly.’
“7. Reverse the drive by Exxon and the other ‘majors’ to control other forms of energy, including coal, uranium, and geothermal. This reversal would encourage inter-fuel competition and foster market economics to replace energy conglomerates.
“8. Stop wasting money in a way that defrauds the consumer. Exxon spent $250 million a few years ago to change its name from Humble, Esso, and Standard Oil of New Jersey to Exxon. While retiring the name ‘Humble’ may be seen as a rare act of corporate humility, consumers would have preferred saving a quarter of a billion dollars.
“9. No more conclusive tete-a-tetes with our industry brothers, industry trade associations, and government officials who are temporarily on leave from oil company positions. Such ‘in concert’ behavior only furthers irresistible resistance to market economics.
“10. If Exxon accomplishes the above nine objectives, then government price controls and court actions can be lifted.”
If that is your agenda, Mr. Slick, you could be hailed as the champion of the consumers.