Where's Bad Publicity Leading for Big Oil?
The upcoming August 13th issue of Newsweek has been much publicized already, with a cover story about how companies like Exxon Mobil (XOM) funded the scientific denial of global warming, sponsoring studies that obfuscated the issue for years.
The accusation sounds familiar, at least in part because another industry has been going through the painful process of public castigation and court battles for similar actions. The cigarette industry, headed up by giants like Philip Morris, now part of the Altria Group (MO), and RJ Reynolds, which now answers to British American Tobacco (BTI), is widely believed to have knowingly suppressed public knowledge of any ill health benefits from tobacco for decades.
The problem for Exxon Mobil, not to mention Royal Dutch Shell (RDS-B) and Chevron (CVX), is that global warming threatens to balloon into the public sphere much faster than smoking-related cancer did. Most people are already aware of the potential problems; worries are mounting every day, along with the threat of backlash from consumers who increasingly see Big Oil as the enemy.
That backlash was behind the aftermath of Hurricane Katrina, when public anger brought Congressional pressure on the large oil companies. And it's increasingly the reason for interest and investment in companies like First Solar (FSLR) and Toyota (TM), for their solar cells and hybrid vehicles, respectively.
In short, if the question is whether public anger, misplaced or not, can affect massive companies with solid business models, the answer is yes; our dependence on oil will make it hard to tone down the flow of cash to their coffers, but it will happen, over time.
More immediately, our local representatives will be sure to take whatever actions make them look heroic to the voters, including passing legislation harmful to Big Oil. And, in time, we may yet see court cases attempting to extract damages from the companies, just as happened with Big Tobacco.
In the meantime, there's plenty of opportunity for the named companies to watch out for their own interests by putting some genuine effort into garnering good publicity -- for instance, by taking a page from General Electric's (GE) potentially profitable good citizenship initiatives. |
