June 12th, 2013 at 9:54 am
Steve Coll’s “Gusher,” published in The Best Business Writing 2013 offers a behind-the-scenes look at the tremendous influence ExxonMobil has in Washington and in shaping environmental and climate policy. In this excerpt, Steve Coll documents some of the early battles between ExxonMobil and the Obama administration and how the company and its CEO, Rex Tillerson, helped to kill the cap-and trade bill:
ExxonMobil’s initial efforts to reach out to the Obama administration gave way, during 2009 and 2010, to a succession of legislative and policy battles in which the corporation and the new president found themselves on opposite sides. Tillerson sought meetings with Treasury and White House officials to explain ExxonMobil’s views on energy markets, domestic drilling, climate legislation, and the recession. On one occasion, Tillerson joined a group of chief executives at dinner with Obama. In general, however, wary administration officials saw no reason to favor ExxonMobil with access. There was little basis for trust on either side. ExxonMobil lobbying sessions with Obama’s team at the Treasury Department or the Department of Energy could be stiff, with Fariello and other lobbyists enunciating ExxonMobil’s advocacy positions, sometimes just by reading from notes and prepared materials. During the first three years of Obama’s presidency, the corporation spent more than fifty-two million dollars on lobbying in Washington, about 50 percent more per year than during the Bush presidency.
The most important challenge that ExxonMobil faced was the climate bill, known as “cap-and-trade,” which Obama and congressional Democrats introduced early in 2009. The House of Representatives passed a version of the law in June and moved it to the Senate, where the most difficult negotiations were expected. The proposed law would have established a new regulatory system under which polluting corporations could buy and sell permits to emit greenhouse gases, under an overall “cap” that would seek to reduce the rate of global warming.
ExxonMobil denounced the cap-and-trade system as unwieldy and bureaucratic. It did, however, announce that it would support a straight “carbon tax,” which would create incentives for reductions in coal and oil use.
The proposal was a major policy shift for the corporation, which had come to it aft er years of isolated, deliberative policy analysis. But there was little support for the idea among Democrats. They knew that Republicans—many of whom had signed pledges never to raise taxes—wouldn’t go for it. And they had determined that cap-and-trade was the climate-change policy they would try to pass. Exxon’s support for a carbon tax would have been welcome in, say, the early nineties, when Al Gore was pushing the idea. But the debate had moved on.
Tillerson’s support for a carbon tax marked the first time that any ExxonMobil chief executive had advocated responding to the threat of global warming by raising the cost of oil and gas production. But, because ExxonMobil ardently opposed Obama’s cap-and-trade bill from the start, it managed to leave the impression, as a senior Obama adviser put it, that it sought to “follow a track that was quite different from the other majors—being firmly fixed in the ‘Fuck you, no apologies, oil-is-hereto-stay’ mode.”
The story of how Obama’s climate bill died in the Senate during 2010 involves many politicians, industry interest groups, and corporations. Ultimately, it was probably hurt most by the high unemployment rate, which made moderate Democrats and Republicans fret more about imposing new costs on the economy.
Throughout the lobbying scrum, ExxonMobil persisted with its lonely argument for a carbon tax. Its lobbyists left behind in congressional offices PowerPoint presentations documenting a private Hart Research Associates poll, “Energy and Climate Change Policy,” showing that Americans preferred Tillerson’s straight carbon-tax idea to cap-and-trade, especially when the differences between the two approaches were explained. But Tillerson had tied the corporation’s lobbyists to a proposal that was irrelevant to the practical discussions then taking place on climate policy.
ExxonMobil’s strategy in Washington was vindicated during Obama’s first term: not only did cap-and-trade die but the windfall taxes on oil companies proposed by Obama during the campaign failed, too. When Republicans took back the House in the 2010 midterm elections, ExxonMobil’s lobbyists no longer had reason to fear that Obama or congressional Democrats could upend their industry with climate or tax laws.