Energy is one of the most significant industries in the global market. With the combination of high demand, political tactics, and environmental effects, this industry is also one of the most controversial. The 1999 merger of Exxon and Mobil, known as Exxon Mobil Corporation, was very significant to this industry and was also the largest merger at the time. Exxon Mobil Corporation produces oil, gas, and petroleum products and is based in Irving, Texas (“#415 ExxonMobil”). Through this blog, we will take a look at the history of ExxonMobil to formulate a stance on whether or not this mega-merger should exist.
With any merger, there are always concerns: Will the mega-merger monopolize the industry? Will it take advantage of its market power to skyrocket prices? Will it no longer improve the quality of its products? ExxonMobil was not any different and faced speculation upon the announcement of the merge. As the number one and number two companies in the industry, people felt that the mega-merger may have to give up some of its assets in order to pass the anti-trust laws, which are in effect to maintain a competitive market (Brooks). Upon hearing that the two most powerful companies in an industry were combining, people could have interpreted the motive in several ways. Some may have thought it seemed like a recipe to monopolize the market or as a way to protect each other since the oil industry is very volatile. Lee Raymon and Lou Noto, the chairmen and CEOs of the respective companies at the time of the merge, stated, “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” (“Our History”). This statement reveals that the merge was intended to be the happy medium between monopolization and desperation for protection.
Furthermore, with there being so many environmental effects tied to the energy industry, environmentalists worried about how ExxonMobil would affect the environment (Brooks). Think about it: ExxonMobil could have pursued activities that would have significantly harmed the environment, and with holding so much market power, it could have monopolized the industry. If that was the case, consumers would have been inhibited in their ability to show their disapproval through consumer choice as there would not be other competitors to choose.
However, ExxonMobil has stuck to its claim of being an “effective global competitor” and has sought out several opportunities to further develop and enhance their products (“Our History”). In 2002, ExxonMobil served as a leader in taking action in the Global Climate and Energy Project, an initiative that seeks to find technological ways to meet the demand for energy while minimizing greenhouse gas emission (“Our History”). Since then, ExxonMobil has pursued partnerships and taken many actions with an environmental focus over the years: increasing oil production in algae with Synthetic Genomics, further developing production of unconventional resources with XTO Energy Inc, reducing greenhouse gas emission in plastics manufacturing with Georgia Tech, and more (“Our History”).
ExxonMobil is continuing to find ways to be an advocate for the environment while also meeting the demand for energy. Most recently, the mega-merger has been working on developing technology that removes carbon dioxide from emissions and has also invested $100 million in research and development for lower emissions with the U.S. Department of Energy’s National Renewable Energy Laboratory and National Energy Technology Laboratory (Leggate).
In regards to the economy, the ExxonMobil merger has enabled the ability to significantly increase levels of production. For example, in the first 12 years as a joint company, daily production of natural gas increased from 6.34 billion to 9.27 billion cubic feet of natural gas (Corcoran). However, the merger has had varied effects on employment. Initially, the mega-merger looked to save $2.8 billion of labor costs by laying off 9,000 of its 123,000 employees worldwide, but in 2018, ExxonMobil announced a long-term effort to expand its workforce. The mega-merger reported that it would invest $50 billion over the next five years to expand its business and subsequently create more job opportunities.
All things considered, ExxonMobil seems to me to be a mega-merger that has been a success and should continue to exist. At this point, it would be very challenging to eliminate all oil, gas, and petroleum products from the market. However, with environmental concerns at the forefront of society, ExxonMobil has taken the initiative to improve its products and eradicate the the negative effects its products take on the environment. ExxonMobil is also seeking to provide more job opportunities, which would be an asset to the economy. With its environmental and economical efforts in mind, ExxonMobil Corporation has had a positive impact on the energy industry.
Works Cited
“#415 ExxonMobil.” Forbes, Forbes Media LLC, 2020, www.forbes.com/companies/exxon-mobil/#4559bd3601f0.
Brooks, Nancy Rivera. “Exxon and Mobil Agree to Biggest Merger Ever.” Los Angeles Times, Los Angeles Times, 2 Dec. 1998, www.latimes.com/archives/la-xpm-1998-dec-02-mn-49856-story.html.
Corcoran, Gregory. “Exxon-Mobil 12 Years Later: Archetype of a Successful Deal.” The Wall Street Journal, Dow Jones & Company, 30 Nov. 2010, blogs.wsj.com/deals/2010/11/30/exxon-mobil-12-years-later-archetype-of-a-successful-deal/.
Leggate, James. “Five Things to Know About Exxon Mobil, The World’s Largest Public Oil Company.” Fox Business, Fox Business, 1 Oct. 2019, www.foxbusiness.com/money/exxon-mobil-worlds-largest-public-oil-company-5-things-to-know.
“Our History.” ExxonMobil, ExxonMobil Corporation, 4 Sept. 2018, corporate.exxonmobil.com/Company/Who-we-are/Our-history.
I never knew ExxonMobil was a merger before. I think it is fantastic that the merger has not turned out to have a negative effect on competition and that it in fact has turned out to be beneficial with ExxonMobil investing into cleaner forms of energy
I remember reading about the merger of ExxonMobil and I was quite surprised that it was allowed to happen. These were two of the biggest energy companies in the country and their merger made them a powerhouse. With this being said, it seems that this merger had many positives that came out of it. So, I believe that it was a good thing that this merger was allowed to happen.
I can see your stance on this merger possibly occurring for the good. Especially, with the idea that it allows two previous companies to remain competitive in their market and to become an asset for the economy by expanding their workforce. While they are attempting to lessen their carbon footprint, I still think that the merger is not all a benefit to the environment. At the same time, how can we actually eliminate oil and a mega corporation like this with such a large hand in the economy?
I was not aware of this merger, and kind of just always assumed the company was always ExxonMobil. It is great to see that the company maintained the commitment to provided more clean sources of energy that will benefit the environment. They also have shown a commitment to continue to advance their products and provide more jobs to expand their workforce. In an industry as cutthroat as energy, this merger seems to have worked out very well.