ExxonMobil Essay

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ExxonMobil  Corp.  is  the  world’s  largest  publicly traded oil company, and one of the largest U.S. companies, with $404 billion in revenue  in 2007 and a market valuation of $504 billion at year end. In 2007 the Irving, Texas-based company produced  roughly 3 percent of the world’s oil. The company was formed in 1999 when Exxon Corp., the largest U.S. oil company, acquired Mobil Oil, the country’s second-largest oil concern.

Nearly two-thirds  of the  company’s  net  income in 2007 was generated through  its production of oil and natural gas, which includes fields in the Gulf of Mexico, the Arctic, Russia, the Caspian Sea, offshore West Africa, and the Middle East. ExxonMobil has about 11 billion barrels of oil reserves as of the end of 2007, or 0.9 percent of the world’s proved reserves— which ranks it behind government-owned oil companies such as those  of Saudi Arabia (the largest), Iran, and Venezuela.

ExxonMobil also has a large worldwide petroleum refining and marketing operation that includes 32,000 service stations. It owns several top-selling global brands, such as Esso gasoline and Mobil 1 motor oil. Its petrochemicals  operation  is also large and spread around the globe, making, among other products, key building blocks of polyester and plastics.

ExxonMobil had its origins as the largest parts of Standard Oil, the massive petroleum  company incorporated  in 1870 by John D. Rockefeller and his partners. Standard Oil became one of the biggest and most famous companies  in the world, built in part on its efficiency in transportation and refining, and in part on ruthless  competitiveness.  Standard  controlled  90 percent  of U.S. petroleum  refining capacity by 1880, and dominated  the petroleum  and kerosene market for  several  decades.  It  eventually  began  acquiring oil-production companies,  creating  the  first  vertically integrated  oil company. The United States sued Standard  under  the  1890  Sherman  Antitrust   Act, and in a landmark  1911 decision, the U.S. Supreme Court broke Standard up into 34 fragments. The largest fragments  were Standard  Oil Co. of New Jersey (which changed its name in 1972 to Exxon) and Standard Oil Co. of New York (which changed its name in 1966 to Mobil Oil). The year 1911 also marked the first time Standard’s sales of gasoline surpassed those of kerosene.

The independent Standard  Oil Co. of New Jersey was among the oil pioneers in international expansion, first in Iraq and later in Saudi Arabia. In the late 1920s and 1930s, Jersey Standard also led the way in expanding into petrochemicals.

The oil market  changed  in the  1960s and 1970s, as power shifted to national  oil companies  and the OPEC cartel of oil-producing nations. Oil prices rose, and many consumers  blamed  large U.S. oil companies such as Exxon—in part because higher oil prices pushed  Exxon to the  top  of the  Fortune 500 list of the biggest American corporations.  Both Exxon and Mobil diversified into non-petroleum businesses, including Exxon’s failed attempts  to enter  the computer  market  and  Mobil’s  brief  ownership  in  the 1980s of the Montgomery  Ward  department stores. Following these setbacks, the companies  focused on their core businesses of oil, gas, and chemicals.

Exxon has long been known as an engineer’s company that attracted  little public affection, but its single-mindedness developed into a reputation for being environmentally  unfriendly after a March 1989 accident involving one of its tankers, the Exxon Valdez. The Valdez hit a reef and spilled 240,000 barrels of oil into Alaska’s Prince  William Sound; the  incident,  which incurred a $2 billion cleanup, struck a chord with the public, bolstering environmental consciousness.

Exxon’s emphasis on efficiency (sometimes  at the cost of its image) has consistently made it among the industry leaders in such measures as return  on capital. Exxon’s publicly traded shares typically trade at a premium  to those of rival integrated  oil companies, which in part enabled Exxon to acquire Mobil in 1999, in what was the largest oil merger ever, to form the current  company. The merger, at the time the biggest in U.S. history, took place against a backdrop of ever- larger oil projects and increased industry consolidation. It allowed for economies of scale and cemented ExxonMobil’s leadership position.


  1. BP Statistical Review of World Energy (2008);
  2. Colvin, “Exxon Mobil: The Defiant One—The Big Oil Company Doesn’t  Care  About  Alternative  Fuels or  Pleasing the  Greens.  Is Its  CEO Nuts—or  Shrewd?,” Fortune (v.155/8, 2007);
  3. ExxonMobil Corporation,  exxonmobil.com (cited March 2009);
  4. ExxonMobil Corporation and ESSO UK, UK & Ireland Corporate Citizenship (ESSO UK Ltd., 2006);
  5. William E. Hale, Robert H. Davis, and Mike Long, One Hundred  Twenty-Five Years of History (ExxonMobil Corp., 2007);
  6. Ollinger, “The Limits of Growth of the Multidivisional Firm: A Case Study of the U.S. Oil Industry from  1930–90,” Strategic Management Journal (v.15/7, 1994);
  7. “News & Insights—Pump Cash, Not Oil—Mighty Exxon Mobil Is Stinting on Exploration and Bingeing on Buybacks. The Lesson Isn’t Lost on Its Rivals,” BusinessWeek (v.34, May 28, 2007);
  8. Nelson Schwartz, “Exxon Mobil:  The  New  No.  1—The Biggest Company in America Is Also a Big Target,” Fortune (v.153/7, 2006);
  9. Union of Concerned  Scientists, Smoke, Mirrors & Hot Air: How ExxonMobil  Uses Big Tobacco’s Tactics to Manufacture Uncertainty on Climate Science (Union of Concerned Scientists, 2007);
  10. Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power (Simon & Schuster, 1991).

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