Big oil: An underappreciated, necessary evil

Ever since the first drop of oil came gushing out of Drake’s Well in 1859, oil has been a feared, mysterious and revered commodity. Photo: Associated Press

WASHINGTON, April 5, 2013 ― Ever since the first drop of oil came gushing out of Drake’s Well in Pennsylvania in 1859, oil has been a feared, mysterious and revered commodity. However over the next 150 years, Americans went from being inquisitive towards oil, to revering it, to hating it, to loathing it. Yet even with the catastrophes of Exxon Valdes, the Gulf Oil Spill, and countless other PR black-eyes, “Big Oil” is still perpetuating success. The question is how?

Exxon Mobil provides a terrific example of how a corporation can influence and manipulate the consumer decision-making process. Just last week, exactly one year after Apple surpassed Exxon as the most valuable U.S. company of all-time, Exxon retook the crown, though just for a day. When you think about the popularity of their products and the praise that Apple gets as a company, it is somewhat bewildering that the dirty giant that is Exxon can rival it. We should not be surprised, as success is in Exxon’s DNA.

Rewind to 1911. Standard Oil was the most impressive of all of the monopolies that Presidents Theodore Roosevelt and William Howard Taft tried to break up. These monopolies burst onto the scene at a time when there were horrible inefficiencies in the fledgling U.S. industrial age. In fact, the inefficiencies were so troublesome that they would have set us back decades if the magnates of the time did not consolidate and innovate.

Eventually, due to the massive wealth and political connections they created, these men began to wield power that rivaled that of the highest office in the land. Teddy Roosevelt, being a proud bull of a man would have none of it. That set the stage for what became an embittered battle of government versus industry. History tells us that the emergence of an amazingly strong and popular leader coupled with the public’s awareness of the plight of the common worker allowed for the dissolution of J.P. Morgan’s U.S. Steel and John D. Rockefeller’s Standard Oil.

The breakup of Rockefeller’s Standard Oil created more than thirty new companies, among them Jersey Standard, Standard Oil Company of New York, Standard Oil of Indiana, and Standard Oil of California. Those names are unfamiliar now; after some reorganization, they became known respectively as Exxon, Mobil, Amoco, and Chevron. The world of Oil & Gas as we know it emerged from one singular behemoth a little over 100 years ago.

Given the dark cloud, or more appropriately “dark geyser,” that has dogged perception of oil and gas since the 1800s, we should not be surprised that these companies continue to be shrewd marketers. This aptitude for adaptation reflects the simple understanding of “survival of the fittest.” In Exxon’s case, its ability to nimbly maneuver after catastrophe is due to its understanding that it produces something that is as essential to everyday life as air and water.

SEE RELATED: So, how’s your green energy stock doing?

It is for this reason that a few sly moves ― such a greased palm, funding research that contradicts global warming, or a name change to disassociate it with a calamity ― help it to tailor perception. Deep down the public knows companies such as Exxon are needed; they know the risks they pose and the value they bring to the world. These firms have a dark side; Exxon is a business, a huge and powerful one, with interests that aren’t always ours. But it maneuvers to control its image with massive contributions to the arts and education, commercials speaking to development of cleaner-burning and renewable fuels, and so on, moves which are effective propaganda but which also do a great deal of real good.

“Big Oil” carries a negative stigma, but it will also play a leading role in the renewable energy movement. Firms like Exxon are energy firms; they can see the writing on the wall and have the depth of research and the wealth to develop alternatives to oil. Unlike the “green” companies that have recently failed (e.g., Solyndra and A123 Systems), they can sustain research and development costs without relying on government subsidies.

Environmentalists and left-leaning politicians fail to see that these companies as the future, seeing them only as the past. But because of their desire to survive and remain profitable in an ever dynamic market place, they are the future. Standard Oil started out as a kerosene company; however once electricity rivaled and replaced kerosene as a way to light the world, Standard did what successful companies do; it let go of the past and embraced the future, producing fuel for heating homes and powering vehicles.

The truth of how the public views “Big Oil” can be summed with one of the classic quotes of American Cinema:

“Son, we live in a world that has walls, and those walls have to be guarded by men with guns. Who’s gonna do it? You? You Lt. Weinberg? I have a greater responsibility than you could possibly fathom. You weep for Santiago, and you curse the Marines. You have that luxury. You have the luxury of not knowing what I know. That Santiago’s death, while tragic, probably saved lives. And my existence, while grotesque and incomprehensible to you, saves lives. You don’t want the truth because deep down in places you don’t talk about at parties, you want me on that wall, you need me on that wall.”

Col. Nathan Jessep in many ways represents Standard Oil, or Exxon Mobil, or British Petroleum. We do not necessarily like them or understand them. When things get ugly and their dark side rears its ugly head, we may hate them and propose legislation to stop them. However, deep down, we know the reality: we need them on that wall.


ABOUT THE AUTHOR: Erol Senel has been plying his trade in the world of finance and personal investing. Through this real world experience, he has found his true professional passion in economics and financial history.

Contact:   Twitter: @senelslant


Economist (1999, Dec 23). Standard Ogre. The Economist. Retrieved from

Russolillo, S. (2013, Jan 25). Exxon Overtakes Apple as Biggest U.S. Company by Market Cap. Wall Street Journal. Retrieved from


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