 I'm Nicholas Thompson. I'm a Future Tense Fellow at the New America Foundation and the editor of NewYorker.com. And tonight, during dinner, I will be interviewing and discussing Steve's new book on Exxon, which I have had the privilege of reading cover to cover, and which is utterly fantastic. And I'll be asking him all sorts of horrible questions about it and grilling him and trying to repeat some of the drama of the morning. But in order to do that, in order to connect this conversation to this afternoon's program, which wouldn't be an easy thing to do on paper, we were talking at dinner, and I just wanted to ask him to tell a story about how he was almost fired from New America when he started as a fellow. How many years ago? 11 years ago. 11 years ago. So I'm one of the most senior fellows here. I haven't been on the payroll for a while. You were only 24 at the time? It's 24 at the time. And if there was one unifying sort of subject for those of us who come at the conference these couple of days from a tech perspective or from a humanities perspective, it's free speech. It's basically speech. How do you define speech? How do you defend speech? And so this is a story about free speech in New America. It's amazing. So explain what happened. You were one week into your fellowship. You were a Markle fellow. As a Markle fellow, I was one week into my fellowship. And I had just written a piece in the Boston Globe ideas section about the word hero. And the argument was that the word hero had this great... Ray, you have to date it. Oh, sorry. This is December of 2001, which is three months after September of 2001. And the argument was this is the history of the word hero. This is what it used to mean. It's now being used much more loosely. And that has consequences. Not everybody we call a hero is a hero. So kind of complicated historical argument. I thought you're pretty good, pretty interesting. You were 24 years old. 24 years old. You got to go out and make that argument three months after September 11. So I got a phone call from a television show that I hadn't really heard of called the O'Reilly Factor. And they asked me to come on. And of course, I say yes, because I'm 24 and I'm supposed to promote these things. So I go on, not knowing it, not having watched it. And I walk on set. And there's a picture of a firefighter bringing a woman out of the towers as they come down. And O'Reilly says, our next guest thinks this man is not a hero. Please welcome Nicholas Thompson, a Markle fellow at the New America Foundation. So I then spend the next 15 minutes not doing very well. And apparently, the New America Foundation spends the next day getting about 1,000 phone calls from the National Firefighters Association of America saying, we want Nick Thompson's head. I don't know any of the senior management in New America. So there is a meeting a couple of days later, or maybe the next morning, saying, should we just immediately fire this guy? And I'll take over to save you from embarrassment and say that the official minutes record that there were recommendations made that he be fired. But that, in our midst, Mike Linde argued that he should stay and won the argument. And Nick Thompson is now the editor of NewYorker.com. So there's a hero. So actually, I mean, yeah. So that's where free speech is measured when it's uncomfortable. As it was perhaps for 45 minutes this afternoon. OK. All right. Well, let's. Now your turn. I won't be anywhere near as interesting. So I figured I'd get that right. Let's get into private empire. So Steve, Exxon is one of the largest corporations in the world. It's secretive. It's clan-like. It's employees get kidnapped all the time. It's involved with unsavory regimes. It does all sorts of wild, morally ambiguous things. What drew you to this story? Yeah. I mean, the sort of boring answer is that I did a couple of books that were sort of about America and the world after 9-11. So I did ghost wars, where did 9-11 come from? And then I did bin lans, which I wanted to be about the modernization of the Middle East, the Gulf, Saudi Arabia, generational experience in the era of globalization, how complicated it was. And when I finished that project, I wanted to write about oil and globalization, oil and American power, oil in the international system. I was, of course, inspired by the prize when I was a kid coming out of college. There were four or five books that I put up on my shelf literally and metaphorically saying, you know, someday I will write a book like that. And the prize was one of them. And so I thought, I'll just write something about oil and the international system in a world of constraints and limitations and change. And so I started out that way. Actually, I signed the book up that way. And I went off into the field and started researching, researching. And pretty quickly, I realized I needed a story to tell that was more specific. So I decided to choose a single company after I'd already embarked on that project. And once I hit that intersection, I thought for an American readership it had to be ExxonMobil because of their size, their scale. I didn't actually understand at that stage quite how distinctive they were as a company, but that was where it began. They are quite distinctive. They are. And so then I turned to them and they've rewarded me as a storyteller, I suppose, in the ways that you described. Let's talk about one of my favorite characters in the book, Mr. Lee Ironass Raymond, the CEO for many years. One of my favorite stories is one of his senior executives, bicycles a lot and sort of a daredevil and crashes and hurts himself. And he's in the hospital with a broken collarbone. Phone call rings, it's the CEO, it's Lee Raymond. And he says, you may think I'm calling to see how your recovery is going into wish you well. That's not true. I'm calling to tell you, you will never have another injury as an employee of ExxonMobil. So my question, Steve, is what about management for New America? Did you learn from? Yeah, you know, it's hard to interpret his success, because he was pretty much the most successful oil executive of his generation in, you know, by a lot of metrics. And he grew up as almost all of the executives at ExxonMobil do as a career, you know, lifer. They, we were talking at the table, I think if you took the top 100 or 200 corporations in the United States and you looked at the top 30 or 40 executives, you wouldn't find any example but ExxonMobil where zero of the top leadership had come from outside. Normally people move laterally, right? They come from a competitive company or they come from another industry. They come in with some fresh ideas. And at ExxonMobil, it's more like the military. You don't become a general in the Marine Corps, you know, by having a successful career at IBM, you know, you go all the way through the system and that's their culture. And he exemplified that, succeeded in it, was tougher than the next guy. And so he was very hard on his colleagues, but he also did something that's very hard to do, I think, in an organization that scale, which was he remade it. He remade it in his image and then made the numbers work over time. You know, I did read the jobs biography and I thought, well, there you can learn something for New America actually, which was that he... Manipulation, reality distortion. Well, and I, you know, I guess what they have in common, they're both closed systems which New America's the opposite of. So that was interesting to reflect on. So what's the difference between closed system and an open system? And then the other thing though is that they both had really intolerable attitudes towards mediocrity. And they were just constantly saying excellence is all that it's worth getting up for in the morning. And then they would enforce that in ways that quite reasonable people would judge as arbitrary or unfair, but which does get your attention. I don't think any leader of any organization could read those, certainly the jobs biography may be ex-unbobo, and not go home and look themselves in the mirror and say, you know, am I really exacting enough because life is short and we have a lot of work to do. So you'll be more exacting. Well, but maybe not abusive. That would be, maybe there's a sort of synthesis between exacting and not being abusive. And tell me more about the culture when we worked on Steve, an excerpt from the book we were lucky enough to have run in the New Yorker and there was, Steve described the haircuts of everybody. It works for Exxon as a military cut and we have these very meticulous fact checkers in copy car. Yeah, they got described like seven different ways. But what exactly are the haircuts like and what does it mean? Well, it's not like a company rule. I'm just saying, I went to a lot of Exxon mobile events because I didn't, I went to the company, as the book and its notes reflect, I had a limited amount of cooperation from the corporation. I think the notes described that I had eight different individuals gave me background interviews. I visited the corporation several times. I think in fairness to them, they would probably say, and as I talked to reporters who have covered them, it's probably true that they were giving me more cooperation than they normally do. I was interviewed last week by some Reuters reporter who'd covered them for three years and he said, I read the book. I couldn't believe how much access you got. Really well, I feel like I got zero access, but it was helpful what I got. So I saw them in those settings and then I would go to public events where they would be gathered to support CEOs, giving a speech or an executive. And they looked as their competitors described them, folks in uniform. They all dressed similarly and they all had similar haircuts and they did seem to be influenced by military rules and in fact, there are quite a lot of military veterans in the company. And as I say, their whole ethos is similar to military culture in the way that it promotes and selects. Let's talk about Exxon and foreign policy since a lot of the book is about culture and some of my favorite sections are about Exxon's relations in different countries. One section that appears twice, both in the beginning and towards the end, is on Indonesia and Aceh. And I want you to tell the story and I want you to explain the situation where a Bush administration official essentially says to rebels in Aceh, if you continue to attack Exxon, we will label you as foreign terrorists. How did we get to that point and how much of a distortion of American foreign policy is that? Well, so let me be really efficient, but just to set the stage, Exxon merged with mobile in 2000, essentially acquired mobile. And when they did, they basically bought mobile's global properties, which turned out to be in a lot of really nasty places compared to where Exxon had been. So there was a little bit of, oh my God, we just bought four wars. And we hadn't really done that during, somehow our investment bankers didn't do diligence on the separatist insurgencies that we just acquired. So they bought Nigeria, they bought Equatorial Guinea, they bought Aceh. So they had this huge field in Aceh, a gas field and a liquefied natural gas plant nearby, where the free Aceh movement, normally referred to as GAM, was in the throes of a revolt against the Indonesian state, very complicated setting, but basically the prize for their autonomy or independence was this gas field that Exxon mobile operated under contract with the Indonesian state owned firm. And there was a very nasty history before Exxon bought them, in which a number of Achenese young men suspected of being GAM affiliates had been detained and tortured in Indonesian military facilities on the perimeter of these gas fields. And under contract, Exxon was paying the salaries of these Indonesian soldiers. And emails and other documents that have been revealed in litigation, and some of which came through FOIA requests that I did for the book, show that there was interaction between Exxon and the Indonesian forces. And juries will perhaps, if the case ever gets to trial, judge for themselves who was responsible in some legal sense. But it was clearly a mess to be generous about it from Exxon's perspective. So this was a really nasty war. And Exxon engaged the Bush administration, which had its own agenda in trying to put down this rebellion because they wanted democratic Indonesia to consolidate. They wanted the Achenese to stop causing trouble. So essentially the narrative is that a whole series of Bush administration's diplomats sought out one-on-one meetings with GAM leaders. This is in the aftermath of 9-11. And basically said to them, you're not on global terrorists lists. You're attacking Exxon mobile. Literally the chapter title is a quote from a record of a meeting that a Bush administration diplomat had with the Achenese leadership. Do you really want us as an enemy? That was what they said. Do you really want us as an enemy? They said, stop shooting at Exxon mobile and you can go about your business. Well, and how much of this decision made by the US government is because they have a specific interest in how Indonesian politics play out and how much of is it because there was a close relationship between Exxon and the Bush administration? Well, I don't think it was a function of a, I think more the former than the latter. Certainly that's what the diplomats involved said. Look, we wanted this war to calm down so that we could consolidate democracy in Indonesia. I think that's probably credible testimony. But the records, all the cables and the meetings described and the notes from the litigation and so forth certainly describe an intimate, if deeply ambivalent relationship between Exxon mobile and the Bush administration. That speaks to a larger subject which is that you go into these kinds of reporting projects, you figure the cliches can't be true. They're surely they're not just an instrument of the Bush administration and they're not just sort of some left wing fantasy of how oil and power interact. And of course it's more complicated than that. But what's true is that on the one hand, Exxon mobile sees itself as an independent sovereign, makes its own decisions for its own reasons. And on the other hand, where it has opportunity to benefit from the Bush administration's authority in the world, it seeks it out and they actively work on those projects together. Both things are true. Let's talk about another example of that last point which is the Iraq war. And there was a perception among many people that the Iraq war was partly about control of American oil and partly due to the Bush administration's closeness with Exxon. In a recent piece in the New Yorker, you suggest that the Iraq war was actually caused by the lack of success of the Washington Nationals. Yes, that's correct. Which we can get to. Yes. We have to go online to read that. It's too long of a bank shot right there. But more seriously, Exxon's interests in Iraq were quite different from the Bush administration's, explain how. Well, Exxon thrives on stability. So their whole business model is drill holes in the ground all over the world and sit on top of them for 40 years and make money from what comes out of the hole. And if you're drilling holes in places that are unstable, constantly being captured by coup makers or challenged by guerrillas, then you're not gonna get your full value out of the fact that you've got the opportunity to drill that hole. So in the Middle East, in general, they're realists of a real kind of Bob Wright type. I mean, hardcore, just keep it stable. And, you know, so they basically, I mean, for example, not just Exxon Mobil, but Chevron and the other companies in the run up to the Bush administration's arrival in those hopeful days, they were bringing Iranian art shows around the United States, trying to build bridges to the, what was then a reasonable hot to me regime, you know, a stable regime, looking a little bit better than the one today. And the idea was, you know, let's think long run. And that's a sort of a political attitude and economic attitude, and it's also a business model. So it is what it is, is kind of my view of it. What other policies of Bob's did executives at Exxon Mobil share? Let's talk more politics, right? So Exxon is very associated with the Republican Party, as you wrote in your New Yorker piece, it's become in part a finance arm. But in 2006, they made a real effort to reach out and work with Democrats. There was a sense that Democrats are gaining power in Washington, and it didn't go that well. Explain why and tell us about the wonderful retreat in Warrenton. Yeah, well, so I mean, the whole fossil fuel industry obviously has felt itself in a kind of a defensive position since Kyoto overall and around a whole series of other issues, the oil industry, the coal industry. As an industry, they have a pattern of spending that is unusually biased toward the Republican Party. But even within that pattern, Exxon Mobil was for reasons that they describe as the result of an algorithm that they use to judge political contributions and not a desired outcome. Unusually, 90-10 or more in their PAC contributions, company-directed employee-funded PAC contributions to Republican candidates. And when I went with Anna Hanlon, who was one of the researchers who worked on this piece, we went back, we looked at all of the data we could find about how corporations behave in this world. And what you can say is it's anomalous. It's just kind of unusual, because basically a company like that has north of a million shareholders, many of them individuals, but a lot of them pension funds, teachers pension funds, government pension funds. I mean, there's a really diverse community of owners. And so most corporations interpret that position as a guide to be maybe self-interested, but also in a kind of self-consciously nonpartisan way. And at least in the Raymond era, they kind of went up, well, actually up until today. They've kind of gone all in on one side of the equation. And as I say, they have a system that they follow that they think is scientific, but just happens to produce this result. So I don't mean it facetiously, but that is literally what their defense is. So in 2006, kind of late, at least in my reporting, it wasn't really until Labor Day 2006 that their political strategists in their Washington office started to realize that they might lose, that the Republican Party might lose the House, that the Democrats might really actually be on their way back. And so they kind of scrambled around to think, well, what do we do about Democrats? And so that's the narrative you referred to that was in the New Yorker adaptation. It essentially, it starts with one of their political strategists declaring we need a conversation with Democrats. And it leads to, ExxonMobil has this real bias towards data in all things, political affairs, public affairs, media relations. And so they organize these focus groups of liberals to essentially ask what kinds of messaging and communication strategies might resonate and also to try to educate them about where ExxonMobil was coming from. And they did this at a retreat that probably was just as much fun as this one. And tell us, since people are sitting next to each other at dinner and chatting and may not disagree on everything, tell us my favorite sentence of what the woman says to the man about asking him back. So they invited sort of as their focus group, corporate responsibility activists and some energy analysts from think tanks or research organizations and some environmental activists, folks who they knew and who they thought would be respectful and would take the exercise seriously and they did and that we interviewed everyone who was there who would talk to us and that was a pretty good sample. And they all said, look, there was a social contract which would be polite and respectful. No one's gonna yell at anybody or accuse them of bad faith. But there was this effort to try to have honest conversation too, both sides invited, let's have honest conversation. So at dinner, this one woman describes sitting next to, being seated next to the vice president who was in charge of I think a lot of downstream operations and she said very gently, she thought, and I'm threatening Lee. What are you gonna tell your grandkids about why you fucked up the planet? I hope we have it. So that was kind of, at that point they sort of, I think the series didn't really have a second chapter necessarily with that same group. I hope we have some zingers like that tonight. Exxon, part of their scientific method is to group all politicians into four quadrants ranging from friends to them. That was not a scientific method. That was basically an informal mapping of the Washington office in the Bush administration. Yes, but there was such a map. If you were to use that informal mapping, where would they put Obama? Where would they put Romney? What are the issues that, what are the issues in which a Romney administration would differ most from an Obama administration from Exxon? That's interesting. So I think they basically, their quadrants were oil patch people who get it. Tier one, tier two, free market folks, mostly Republicans, not exclusively, but mostly Republicans who may not understand the oil and gas industry, which after all is really complicated, but who have an inclination toward our issues. Tier three, sensible Democrats. They very self-consciously put like Hillary Clinton, Ed Markey, that group. People we can talk to, they're hardly ever gonna vote with us, but they understand what we're talking about and they'll give us a hearing. And then tier four was, and there was a lot of military veterans in the Washington office during the Bush administration, that would be the enemy. And these are people who basically seek to disenfranchise the company or to rent seek on its bad reputation. That would be the way that they would interpret it. And so there's an interesting question. I mean, Romney clearly is like tier two. You know, he's not an oil and gas guy, but he's a free market guy and he basically sets up in a pretty much mainstream traditional way. The question is whether President Obama is tier three or tier four. And I think, you know, he's probably migrated a little bit into tier three over the course of his presidency because I think he ran for office in an era, in a summer of very high gasoline prices, being able to tar McCain with all of the legacies of the Bush-Cheney administration. And while he, and had a deep conviction about alternative energy as a long-term solution and wanted to make national investments to promote it and was preparing transitions associated with that and had no personal contact as a senator or a fundraiser or an office holder the way the Clintons did with corporate America that was comparable to what, say, Hillary Clinton had. And so he got into office and started with, you know, Carol Browner and John Podesta and others in that direction. And then, you know, two things happened. He had to actually bargain for a price on carbon and basically was willing to trade offshore oil, was willing for that, didn't work out a couple of different ways, but he was willing. And then secondly, the unconventional gas thing happened on his watch. And then from a lot of perspectives, including a climate perspective, you're for that. It was his, you know, sort of position. And so that brings him now into the industry sphere and looking for balanced approaches. And that's kind of where, you know, they're wrestling now. And I'm not sure, I mean, oh, Romney will probably raise this during the election, but how much daylight is there between them anymore? I'm not sure. We're going to open it up for questions, but I'm going to ask one more very personally important question. I have the privilege or had, until I switched jobs, to be Steve's editor at The New Yorker and one of the, to the extent Steve needs editing. And when we were closing his Exxon mobile piece, we had one dispute. There was a section at the very end that involved why Exxon was hoping to get out of the actual gas station business. And it was my perfectly held belief that it was fascinating, but didn't flow and was in the last section, had been so interesting, it hadn't been cut in any of the previous revisions. And at the last minute, I insisted that it be cut. And Steve said it's so interesting it should stay in. So Steve. No, that's not actually what happened. What happened was that the super editor, the super copy editor said, this makes no sense. And I said, OK, I surrender. And then you had your way. All right, so anyway, carry on. In any case, before we open for questions, tell us why Exxon wants to get out of the gas station business. So there was this really interesting. So their book describes a really interesting board meeting that actually was one of the last board meetings that Lee Raymond had before he stepped down in 2005. And I think the book describes that the board meeting was in Japan. And basically, he initiated an honest conversation about what the world actually looks like if you're Exxon mobile. I mean, suppose we were all here at Exxon mobile. And what is our strategic problem? Well, if you choose to judge it as a strategic problem, we're hated. Everybody hates us. So why are we hated? Well, occasionally because we spill stuff, but we've gotten better at not spilling things. Why are we really hated? It's because our brand sits on top of a gas pump where the prices rise inexorably or in a volatile pattern. And the people who drive up to that pump have no choice but to fill up at whatever price we tell them. And while they are fuming and thinking about the dinner that they're not going to have on Friday night, they're looking at this big blue and red sign that says Exxon mobile. What's wrong with this picture? Exxon in those cases. So what's wrong with this picture? Well, what's wrong with this picture is we actually don't make any money selling gasoline. I mean, the downstream business and the retail fueling business is the worst part of the business. All the money is in the upstream. Chemical manufacturing is great business. Some of the refining business, they do better than others. But as a margin business, it's kind of a terrible business. So what's wrong with this picture? We're destroying our public reputation every day of the week because some guerrilla group in Nigeria blows up an oil platform. And we're limiting our space. So why don't we just get out of the business, kill all the brands, and become like Dupont? Dupont is basically us. But nobody talks about them. And they don't have any signs on the street. They don't have to buy billboards in baseball stadiums saying that they're for science because the question doesn't arise for the general public. So why don't we just, and we won't be too much less profitable of a business, was the argument. And it was actually, I still find it quite persuasive. I'm persuading now. So what they've actually done is to basically get slowly out of the business. The problem is that if you want to exit that business and create value for your shareholders, and I'm not, I haven't really sort of researched this to the bottom so I'm a little bit talking out of my hat on this, but my impression is that if you want value for what you sell, you kind of have to sell the brand too. So unless you want to reorganize under some different brand, what they're now getting rid of is basically a brand that they're still going to be associated with. So they may get cash, but they haven't actually exited from the strategic dilemma. All right. Fascinating. Deeply fascinating, don't we agree. Should have appeared in the viewer. Sorry, sorry, sorry, sorry. I'm sorry. I'm sorry. So we have time for some questions. So please fire away. Can you tell us how the world looks differently because of Exxon's existence versus the vacuum? Sorry. Can you tell us how you think the world looks differently because Exxon existed versus what would have happened in its absence? Well, I've had a chance to rehearse my answer to that question since you asked it to me once before, but, and it's a good question. It's still a good question and it's not any easier to answer than it was when I tried the first time. So I would say I guess my somewhat incomplete, not fully responsive answer is twofold. First, there are a lot of big oil companies in the world associated with states, Total in France, Eni in Italy, BP, Shell, and Exxon as ours. So in a sense, it's of a species. It's very peculiar though to have essentially a state-owned oil company of that scale and influence in the world that lives with such distance from the state that it's notionally associated with. In other words, ExxonMobil was born forcibly broken up by the United States Supreme Court and in many ways it still lives in opposition to the American state. That's perfectly within its rights in a sense, in the way we're organized. But they really see the world from an independent and distinct perspective. The easiest way to thumbnail it is that the current chief executive told Scouting Magazine recently that his famous, his favorite book is Atlas Shrugged. Now, the chief executive of Total would not say that his favorite book is Atlas Shrugged. I mean, he would have gone to school with the prime minister and the energy minister and they would be trading apartments and houses in the south of France and they would be talking about Gabon and going to Chad and sleeping on the air base. I mean, they would be of a piece. And in our system, it's just kind of the way we are. We do it a completely different way. So that's one thing that's interesting. It means their power in our society, the nature of their concentrated power, its political implications is distinct. It's very American. I think the other thing, which is a little bit more of a bank shot and isn't really about ExxonMobil, but it is something that I find myself thinking about as I have to try to interpret my own reporting. Which is it's a little bit of an accident that when you turn on a light switch, the company behind the power generation is almost certainly subject to utility regulation in which there's a notional public interest standard because there's an understanding that the provision of electric power is so central to the economy and to individuals that it requires, in a historical narrative, it requires a certain kind of oversight. And there's profit to be made and there's privatization to be considered, but there's a band of profit making and there are caps and so forth. And if a storm comes and PEPCO doesn't deliver enough electricity, there's some channel by which PEPCO can be yelled at to cut more trees down. And the provision of gasoline in the way our transportation fuel economy has actually evolved in the post-war period is in fact a utility, I would argue. I mean, because people who live in ex-urban communities or in West Virginia are driving to construction jobs in Cleveland Park, D.C., they got no choice but to get in their truck and drive. So when they go to the pump, they are being provisioned by a kind of energy utility. But the way we have organized ourselves in history for our own reasons, you know, that utility function is provided by a corporation that sees itself and is regulated as and exists under the laws as an entirely independent non-utility entity. And so no wonder we're suspicious of that. They have a lot of concentrated power, they're not really accountable. And it's, you know, it's odd. You could go around to different political economies around the world and see lots of different systems within that mix. I'm not saying that they're better or that you get fuel cheaper or more efficiently. A lot of them are politicized and inefficient. But it's a peculiar aspect of how Exxon Mobil distinctly lives in our political economy. Zachary? To see, New America spends a lot of time and you spend a lot of time focusing on the role of government and shaping our lives. And Exxon's market cap, I guess, is around 450. Give or take a few tens of billions of dollars. Apple is, you know, $500 billion each of which is larger than the GDP of Nigeria and their, you know, their income stream in a more equivalent way is certainly profound relative to most countries. Is in writing this book, your own embedded way of saying we ought to be spending somewhat more time paying attention to the global reach, dominance, power, influence of large multinational organizations and shaping the warp and woof of people's lives relative to the amount of time we have traditionally spent in focusing on government. Yes, yes. I mean, profoundly. I mean, that was my personal experience of this project. That was why I slogged through it. That's why I got up every day. That was what I told myself I was doing. I mean, I wanted to write about something that wasn't a government and that it mattered and that was neglected. And, you know, I'm sure Exxon Mobil is not thrilled that I chose them. And they are an interesting story in and of themselves. But a lot of my purpose was to try to choose an appropriate way to write about that subject beyond the single case that I was examining. And the more I worked on it, the more interested I became in the very proposition that you describe. And it's not what it's complicated, of course. But where it's really interesting in the case of the oil industry involves more their position overseas than at home. Because if you see the world from a super major's perspective, Exxon Mobil's or any others, the basic problem is that resource nationalism in the Middle East has locked you out of the great oil pools that the prize documented they used to own in Saudi Arabia and Iraq, Iran, elsewhere. And resource nationalism is spreading all over the world. And most capable states have developed around state oil companies to either control or strongly influence what they have. So if you want to own oil and gas, and that's the business model, equity oil, you basically have two choices. Either you stay in the free market west, where property rights are available to everybody, and there's no complication, but there's not been a lot of oil and gas growth until very recently. Or you go to weak states, which don't have enough strength to build their own state oil companies their own capacity or force you to act as a contractor. And so that's a kind of a strange footprint in the world. On the one hand, in the confident free market west, competing as an entity inside a democracy with outsized influence, perhaps, but you're still a player in a system. And on the other hand, this disproportionate weight. I mean, a country like Chad, which I visited for the research, fourth world country, really a benighted place. Fortunately, only 11 million people there, but that's 11 million people. And the entire US budget to aid Chad, aids food, everything. It's like maximum $10 million a year. The royalty and tax check that Exxon cuts to the authoritarian leader, let's politely call him, in 2006, 2007 was circa $750 million. And so if you're Idris Debi, who are you going to call? And then is the international system? We could go to 100 conferences around Washington about development aid in which the subject would be how to allocate the $9 million that the US bilaterally supplies to Chad. And we would never even know or recognize or have a conversation about the $750-$800 million check that's actually shaping the whole political economy of that country. So that's what interested me. And as journalism, it seemed like really exciting. Though I'm not sure I've succeeded in transmitting that on the page, but that actually was my experience of it. We're running short on time. And this is going to be hard to do, given the quality of the questions I think we're about to get. But I want to pool three questions. So first, I can't see back on the left. And then I think it's Joel on the far back, and then Walter Mead in the middle. So if you could just ask the questions and Steve will answer. And then we'll do one more round, and then call it a day. Yeah, Steve, and as someone who grew up in corporate America, I thank you for the book. It's brilliant. At least I only read The New Yorker. I'll buy the book. Don't worry. But there are two pieces that I'd like to ask you. One is the discussion on the carbon tax if you could replay that for us because they actually came to a position that they could be in favor of it, which if they really let it could be a little bit revolutionary. But again, obviously they didn't want the cap and trade. The second is what, in your mind, has happened in the corporate board room as a result of BP in the Gulf. Because they got a free pass on Exxon Valdez, which is not the same scale of disaster, I agree. But if you did a proportional analysis of what happened in BP, they would have paid a lot more for Exxon Valdez. Has that shook them at all? Has that changed? Because obviously they think they're perfect and they're not going to make a mistake. But there's somebody in the board room that knows that there's a risk that they could. Joel? Jim. Oh, I didn't say it. OK. Steve, you have a question on the branding perception of Exxon Valdez and the retail pump market. And I'm curious how much of that is perhaps how they relate to journalists. Because you described them as such a secret company. And BPS has been described by our new America called Lisa Marganelli as very willing to have people come tour them and talk them about their way that they try to show how green they are or how they try to be friendly to the environment. And how much is the perhaps a public perception based on them trying to be secretive and close themselves off? Or are other oil companies as embedded in foreign politics the same way that you describe Exxon Valdez? OK. This is like a lot of questions. I hope you're writing them down. I'm writing them down. They're all good ones. OK. You want to answer these? Carbon Tax Group of Broadroom branding. OK. Well, let me start with the one I remember. What's really interesting, I think I was able to describe sort of what the dilemma of being unpopular looks like from inside Exxon Mobile. And part of the problem was that there's pretty smart people, very well compensated. They might be a little insular. They might have the windows closed a bit. But they know what they're doing. So they looked at this question. And part of the problem was they could not find a golden age of oil industry popularity on which to model their strategy. Basically, you go back through the whole 20th century, and they've basically been on the wrong side of public opinion throughout, possibly for the reasons we've discussed. And then BP both annoyed and amazed them in its success of greening itself, putting its logo into a sun as if 95% of their revenue wasn't from oil and gas, or 98% of their revenue wasn't from oil and gas. And that whole kind of openness and John Brown's era of corporate governance, a sort of Blair era of an international oil company. And what was irritating, I think not just from Exxon Mobile's perspective, was that all that time BP was deservedly developing a reputation as the worst operator in the business. And that basically, if you called up anybody in the oil industry on the morning of Deepwater Horizon and said the following thing has happened, who's the operator? They would have all said BP. And so the one way that they rationalize their closed system is to say that the same cultural habits and management practices that make us less likely to blow up on a platform are required in everything we do, including our communication strategy or political strategy. You can't start to compromise anywhere. So it's all one system. That's essentially, it is literally a system. It's called the operational integrity management system. If you work for Exxon, you know it as OIMS. And it's a huge series of binders that basically tell you how to do everything. And now, that's just a way to, that was born out of a response to Valdez and the trauma that that accident presented to them. What do we do about it? A worldwide organization operating 180 different countries, 80,000 employees, how do you make sure everyone does the same thing every day? So that's what you get. And so that's the BP thing. And then to transition to the boardroom question about liability, I mean, what Exxon discovered in the Valdez accident is that even if you decide that you're going to build a public reputation, you're going to build a compact with socially responsible investors. Was it you, Zach? Someone was telling me that they had just gotten right with socially responsible. No, it was Jeff Leonard told me. They'd just gotten right with socially responsible investors in the six months before the Valdez. And then the whole thing collapsed. And even 15 years later, they would run their focus groups to try to figure out how to rehabilitate themselves. And they would do word play. They'd say to random people, Exxon, that person would say Valdez. And so they really could not get out of that box. So you look at the risk profile of these companies, and a lot of the way they talk about their risk is political risk, geopolitical risk, closed opportunities, big risk in Russia, Iraq, West Africa. But a lot of their activity is increasingly in high operating risk environments. Deepwater, now the Arctic. And I think as a non-engineer, but as a journalist who's tried to figure it out as best I can, I'm not sure how fully they've come to terms with the extent of risk they're taking. It feels like aviation in the 1930s. We used to deliver the mail by plane in 1930s that every other plane crashed in the rain. Until people figured out how to fly in dark and in clouds. And these people are out on the frontiers. And there's only so much you can do prophylactically to manage that risk if you've not encountered these kinds of settings before, these kinds of geologies, or pressures, or climates, temperatures. Now it's sort of amazing that they don't blow up more often than they have. But the fact is from a business perspective, it's a bet the company day every day you're out there. Because if you lose control of one of these wells, as BP saw, the price tag is just enormous. Now, BP may survive, but what was $20 billion cash out the door, and then liability is still being settled. And then on carbon tax, and I'll let you go to drink and have fun, they really have, they were investors in free market communications groups and a neighbor of ours at 1899L, the Competitive Enterprise Institute that litigated on climate science and regulation, more aggressive than any other company in their sphere between the Kyoto Accords and at the end of 2005. And just my personal opinion, you look back on that record, and it's not something that I think an ExxonMobil employee would be very proud of. Because the kind of communications campaign that they mounted was really an attack on mainstream science and on science. It was not, there were a lot of reasons to oppose Kyoto, mostly on economic and fairness grounds. But they really went after the kind of credibility of the science in a really aggressive way, I think, the record shows. Then they stopped. And they had to kind of reset without admitting that they'd done anything wrong, because they didn't want to invite legal liability. So there was this kind of muddled period in 2006 where they say, we were never wrong, but we were misunderstood. And now let's describe the facts this way. And then it's a sort of nuanced change. And then in 2009, they went further and they said that they supported a price on carbon. $20 a ton, basically. But they wanted a tax, not a Rube Goldberg cap and trade system, which, looking at Europe, not an indefensible position. Now, a lot of people said they were cynical. They were just doing this because it was politically irrelevant when the Obama administration was trying to do cap and trade. And you can debate that. But the fact is they're on the record. And they're a long-term organization. And we will, eventually, after the economic recovery, come back around to carbon pricing at some stage. I mean, Australia finally got there. If they can get there, surely the United States will eventually get there. And when they do, I mean, it would be very difficult for ExxonMobil to turn around and go the other way, I think. So let's quickly do the last two minutes in the very back. And then, Walter, since everybody called on you. In my reporting about Bill Gates, I began to see him as an independent country. And I realized he's just launched his own State Department. Does Exxon have a State Department? And then Walter? You've talked, I thought, in the chat example, very clearly about the kind and amount of power that Exxon wheels in some countries. How would you characterize the amount of power Exxon has in the US system? And how is that deployed? And how often does it get its way? And on what issues? So I think in the US system, they're effective in blocking. That was my kind of reading of their Washington record. And actually, they'll say that that's really only their intent. They don't really need. They just want to outlast liberal reformer waves because they're going to be around for a long time. And they're not really trying to. They don't work like General Electric, frankly. And they constantly tease their colleagues at General Electric, who they regard as rent seekers and contractors and manipulators. People in town are basically looking to win favors and to embed themselves in the federal system, much like a defense contractor must, if it wants to be relevant. So they see themselves. The record doesn't actually line up all the time with their self-image. But they see themselves as standing outside that strategy and just trying to prevent bad things from happening. So they invest heavily in the House Republican Party and in a filibuster-proof Senate minority. And so it's a kind of defensive strategy. And then they do that with API, the American Petroleum Institute, and their colleagues. And often, as with this current Dodd-Frank debate about transparency and oil revenue globally, they can usually bring the whole industry together. On this one, where they're opposing the implementation of Dodd-Frank rules that would require them to disclose payments to international governments in places like Chad at a certain level of detail that they don't want to disclose, they've got even Statoil of Norway with them because their project partners. And normally, Statoil would be on the other side. So they're pretty good at blocking things. But that I would describe as the main nature of their power. Now, remind me about the State Department. Yes. And the director of it is a woman named Rosemary Forsythe, who is a brilliant former National Security Council staffer. It was a specialist in Russia in the former Soviet Union. She runs their political risk department. They have, in their Washington office now, their Africa guy is a guy named Walter Kahnsteiner, who is Assistant Secretary of State for Africa in the first Bush term. The guy before him was a guy named Sim Mothes, who was a former State Department diplomat who worked Africa. And they have, out of their upstream division in Houston and in their country shops and in their headquarters, a whole series of policies, playbooks, and communication strategies that execute their foreign policy. And it is very distinct from the foreign policy of the United States. Very quickly, two examples. In a place like Equatorial Guinea, where they are a big operator and there's a terrible government, they don't want to be associated with the US government's human rights campaigning, because that just makes their conversations with the boss uncomfortable. So they go into that and say, this crazy liberals are the crazy new conservatives always harping on you about human rights. We would like you to perform better would be in your interest to do so. I'm not saying that they collude with human rights violations, but they don't want to be associated with that foreign policy. They want to be able to say, we're here for the long run. We're here for economic reasons. We'd like you to be a better government, but we're not going to harp on you. Then in Iraq, just this spring, the chief executive of ExxonMobil called up Hillary Clinton State Department to inform them that ExxonMobil planned to go do a deal with the Kurdish regional government. Now, anybody who's following Iraq knows that, basically, it has been the policy of the Bush administration and the Obama administration to discourage all major oil companies from going into the Kurdish regional government and doing separate deals with them around oil, because the fear is that it will exacerbate the breakup of the country. And ExxonMobil basically made this call and said in a very straightforward way, we have to do what's best for our shareholders. So that is their foreign policy. And that's the structures that I referred to. And it isn't always as vivid as that, but I think that is the nature of it. All right, well, speaking of what's doing best for the shareholders, let's call it a night, and I'll go drink. So thank you very much, Steve Kahl.