The Return of Big Oil.
But La Follette was disappointed that the government didn't go further. "If the heads of trusts were sent to prison for willful law-breaking, such as this, there would be fewer violations of the Sherman law," he wrote. "Fines they laugh at. `Dissolution' weakens them not a bit.... Plain justice demands that the men back of this Standard Oil villainy be punished."
Of course, no such punishment was meted out. Standard Oil founder John D. Rockefeller retired with enormous wealth and passed on millions of dollars in oil-company stock to his heirs. Business went on as usual in the United States. And today, almost ninety years later, we are witnessing the reunion of the two largest companies created by the breakup of Standard Oil: Exxon (formerly Standard Oil Company of New Jersey) and Mobil (formerly Standard Oil Company of New York). The result will be the largest single corporation in the world.
The deal represents everything La Follette reviled.
The main financial benefit to the two corporations will come from consolidating their operations and laying off about 9,000 workers, for a net savings of $2.8 billion a year.
Individual oil-company executives also have personal financial incentives to go through with the deal. Mobil chairman Lucio Noto stands to gain at least $6 million in cash just by leaving his position, The New York Times reports. Although Mobil discloses as little as legally possible about how executives are paid, the Times reports, it appears that Noto has about $10.3 million in stock options that can't be converted into cash yet. If the deal goes through, these options will increase in value by 46 percent, to $15 million. In addition, Noto could cash in some of the $58 million in Mobil stocks he already owns.
In an eight-minute videotaped presentation, shown to workers shortly after the merger deal was announced, Noto expressed his regrets to thousands of his employees who will soon get the axe. "In his taped message, Mr. Noto, who wore a sweater and slacks instead of a business suit, said the merger would not be without pain, but that he would seek to minimize the impact on employees," Reuters reported.
It seems unlikely that the Mister Rogers act will lessen the sting of unemployment for Mobil workers who have no golden parachute.
The return of Big Oil is part of a resurgence of monopolies--from Bill Gates's Microsoft, to the consolidated airlines, to the armaments industry. But the Exxon-Mobil merger could kick off an even more massive consolidation of wealth and power. "We could wake up a year from now and have half as many players in the industry," Matthew Simmons, a Houston investment banker who specializes in oil-company mergers and acquisitions, told The Washington Post.
The Clinton Administration is considerably more complacent about monopolies than was the Administration of Teddy Roosevelt, whose anti-trust crusade climaxed with the dissolution of Standard Oil. Roosevelt praised the breakup of Standard Oil as "one of the most signal triumphs for decency which has been won," and called the oil company's directors "the biggest crooks in the country."
Contrast that with the mealy-mouthed views expressed by Clinton's press secretary, Joe Lockhart, who answered reporters' questions about the reunion of the largest chunks of the Standard Oil empire by explaining that President Clinton "believes that mergers that make us more globally competitive have a positive role to play."
Monopolies are as dangerous now as they were at the beginning of the century. Reduced competition, price-fixing, and backroom deals are bad for workers, consumers, and the environment.
Oil workers will be the first to suffer from the Mobil-Exxon deal. But consumers won't fare well in the long run, either, according to consumer advocates. "Consumers are eventually going to pay the price, since it induces noncompetitive behavior," Wenonah Hauter of Public Citizen says of the merger.
As Exxon and Mobil move to corner the market on crude oil as well as natural gas, consumers will soon have nowhere else to turn to fuel their cars and heat their homes. The combined company will have the power to set prices and drive competitors out of business.
Both Mobil and Exxon have also worked actively to oppose an international agreement to reduce ozone-depleting gases. "Putting Exxon and Mobil together creates the Death Star of global warming," says John Passacantando, executive director of Ozone Action.
We should be suspicious of the "global competition" logic the oil companies are using to justify their merger. The executives claim that record low prices for oil and the intense competition to explore new, remote oil fields require them to cut costs. But this merger is not necessary. The two companies were not in any financial trouble. They decided to merge simply because they saw they could make even more money.
The relentless drive to drill more oil and get it to market is a foolish, thoughtless process. Oil is an exhaustible resource, and the drilling and pollution caused by our reliance on fossil fuels are doing serious damage to the Earth.
When CEOs and politicians talk about global competition, they are referring to this mindless process of producing more and more goods for a theoretically infinite market. That market nearly collapsed, however, when the Asian financial crisis hit. Prices for oil and other commodities are low mainly because demand in Asia has dried up. Thus, corporations are faced with a glut of oil and other commodities. The sensible response is not to rush ahead madly, cutting jobs and producing more and more commodities. Now is the time to think about conservation, environmental protection, and policies that lift wages for workers and consumers.
Instead, private greed is dictating a destructive, short-term strategy. The fight for the public interest has never been more urgent.
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|Title Annotation:||Exxon-Mobil merger represents dangerous thinking|
|Date:||Jan 1, 1999|
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