ExxonMobil, One of the Biggest Influences in American Lives
The merger of the two companies was an important economic American history event. Standard Oil Company of New Jersey (Exxon) and Standard Oil Companies of New York (Mobil) were created and maintained through John D. Rockefeller’s Standard Oil Trust. Before this merger, both companies created a near similar economic effect on the world history of the energy industry.
The company began in the late 19th century when steel, railroads and banking were among some of the top American industries. The high demand for kerosene, greases, and lubricants allowed the nation’s young and growing petroleum industry to expand. It was then that John D. Rockefeller, in 1882, organized the Standard Oil Trust. Later, the Standard Oil Co.
of New Jersey (“Jersey Standard”) and the Standard Oil Co. of New York (“Socony”) joined and became the chief predecessor companies of Exxon and Mobil.
The U.S. Supreme Court ordered the dissolution of the Standard Oil Trust in 1911 which created nearly 34 spin-offs of the company. The growing automobile industry helped to create the high-demand rich oil and gas industry that is still prominent today. The companies stayed separate for nearly 87 years, until they signed a definitive agreement that the two would merge and form a new company, Exxon Mobil Corporation. “This merger will enhance our ability to be an effective global competitor in a volatile world economy and in an industry that is more and more competitive,” said Lee Raymond and Lou Noto, chairmen and chief executive officers of Exxon and Mobil, respectively (ExxonMobil.com). The merger became official on November 30, 1999.
It has become the largest of four oil super majors. Their major competitors include British Petroleum, Royal Dutch Shell, and Total. ExxonMobil has the highest market value of any other publicly-traded company in the world and in 2005 was the most profitable. The company is also a component of the Dow Jones Industrial Average. Their product names include Exxon, Mobil and Esso (largely marketed in Canada).
The company’s most recent idea is a $20 billion pipeline within Alaska from the Northern slope to the lower 48 states through Canada. Governor Murkowski of Alaska signed an agreement in partnership with BP & ConocoPhillips. This project would move 4.5 to six billion cubic feet of gas daily and would begin operation as early as 2012. It is estimated that the state has about 35 trillion cubic feet of gas reserves.
Many economy analysts are weary in this project, stating that these may not directly lower gas prices. Andre Plourde, energy economist at the University of Alberta in Edmonton said that the world’s largest known gas reserves were actually concentrated in countries not known for political stability including Iran and Russia. “Given the Bush administration’s focus on what it considers to be energy security,” Mr. Plourde. “Alaska is going to get a favorable hearing.” However, if natural gas prices drop as many expect, economic concerns may outweigh the initial concern of security.
In 2005, the company’s economic outlook grew more positive with a near 75% profit increase from the third quarter of 2004 to the third quarter of 2005 of $10 billion. This profit was the highest in the company’s history surpassing past their 2004 fourth quarter record. Meanwhile other United States gas companies continued to jump with profits as well; Conoco Phillips jumped nearly 89%, while BP reported a 34% raise. This continual rise across the gas industry board did not ensure any greater success for ExxonMobil than any other gas company in the nation at that time.
In late March 2006, the company announced a month-long shutdown of its Baytown, Texas refinery which is the largest in the U.S. This may directly cause shortages in gas supplies through the summer months, which will drive prices even higher. It seems that the company needs this constant sales hike to accommodate their other financial obligations. The New York Times reports that the chairman and chief executive officer of Exxon Mobil, Lee Raymond, earned nearly $144,573 a day of the 13 years he served at the top of this corporation.
Most recently, the issue of gas prices has many consumers looking to ExxonMobil to lower gas prices. A great attempt at forcing this price break has been made by various groups that encourage consumers not to buy gas certain days. They believe that if a large group of people stand up against the major corporations then they will give in to create stable earnings.
This week in Washington, President Bush has taken a stand against these companies. CNN reports that he plans to cut gasoline prices and temporarily stop deposits to the U.S Strategic Petroleum Reserve. Bush’s decision to defer this summer’s deposit, an emergency stockpile of government-owned crude oil, creates an unstable economic outlook for the company. The president that by doing this, it will leave a little more gas on the market, and perhaps create a decrease in prices.
Ultimately, the economic decisions of ExxonMobil and their attitude towards consumer prices will cause a change in their pocketbooks. With Congress finally stepping up to fight for Americans wallets, it can be assumed that someone will have to take a dip in their funds. And seeing how Americans have been already paying more than they should, ExxonMobil may decide to take what they can get.
