strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: May 3, 2010
 / Summer 2010 / Issue 59

 
 

Why We Hate the Oil Companies

As Shell’s then top U.S. executive traveled the country, he discovered how corporate leaders create their own reputation for arrogance — and lose their chance to deliver the right message.

This article, by a former president of Shell Oil, was written before the Deepwater Horizon explosion on April 22 and the subsequent oil leak. It is adapted from a book by the same name to be published May 25 by Palgrave Macmillan.

On a brilliant blue sky Saturday morning in August 2006, I found myself in Erie, Pa. At that time (I have since retired), I was the president of the Shell Oil Company — the U.S.-based operating company of Royal Dutch/Shell, and itself one of the largest oil companies in the world. I was conducting an outreach tour.

We had started the tour after Hurricanes Katrina and Rita hit the Gulf Coast in the late summer of 2005, just months after I became company president. Oil prices had been climbing for the past three years, and the serious supply disruptions caused by the storms sent them skyrocketing. I started receiving hate mail, including a drawing showing me hanging in effigy; not ex­actly what I expected when I took the job. Moreover, most lawmakers were ignoring the critical issues in energy: the need to guarantee affordable supply from as many sources as possible, to take climate change impact (and other emissions problems) seriously, and to safeguard energy security.

I had something to say about this — and I still do. Total energy use in the United States has tripled in the six decades since 1950. Consumption has also shifted from manufacturing to residential and commercial use; much of this growth can be traced directly to the in­creased use of computers and associated servers, printers, and other devices. With the massive populations of the world’s emerging economies, the spiral of energy de­mand is accelerating. But both governments and the energy industry are dismally unprepared for a future of rapidly rising energy demand and insufficient sources of supply. And this is especially serious given the very real need for lower environmental impact — not just from carbon emissions but from all energy-related emissions — and the time it will take to shift to more renewable en­ergy. The countries that don’t address these issues now, even if they seem to be all right in the short run, will face electricity shortages, constraints on their manufacturing and computing industries, excess air pollution, and ultimately a permanently damaged quality of life.

We understood this at Shell, but we weren’t being heard, and we realized that one of the main reasons for that was that we weren’t listening to anyone else. Thus, from mid-2006 to early 2008 I crisscrossed the United States, visiting 50 cities, together with about five managers per city — some 250 Shell people in all. We met with business leaders, community leaders, government representatives, the general public, and our own wholesalers and retailers. We listened in town hall–style meetings and spoke in a range of venues. I interacted with tens of thousands of Americans; I was probably out in front of the public more than any of my peers, the chief executives of other U.S. oil companies. All of this took up roughly 6 percent of my time, which is not all that much. But it was a lot more than I had imagined when I first took the job.

Friendly and Unfriendly Encounters

My weekend itinerary during those months often in­cluded stopping by local Shell stations, unannounced, to chat with store managers and customers. And my first store visit in Erie — a family-oriented city whose local economy was in transition from industrial enterprise to entrepreneurial services and information management — could not have gone better. The manager was not present, but the cashier, a young woman with less than a year of experience, greeted me with a hello and smile. She was cleaning an already shining checkout counter, and her broom and dustpan were right behind her. The store was bright and cheery, with plenty of Shell promotional materials highlighting our popular NASCAR sponsorship. The shelves were stocked neatly, the freezers full, the beverage refrigerators well arrayed. You could smell the morning coffee, and that’s where I went first.

 
Page 1 2 3 4 5 6 7  | All | Next Last>
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. Stewart Brand, “City Planet,” s+b, Spring 2006: How the profound consequences of increasing urbanization are changing the way we think about demographics, cultural vital­ity, and economic development.
  2. Viren Doshi, Gary Schulman, and Daniel Gabaldon, “Lights! Water! Motion!s+b, Spring 2007: Rebuilding the world’s urban infrastructure can be done only by integrating energy, transportation, and water.Peter Senge, Bryan Smith, and Nina Kruschwitz, “The Next Industrial Imperative,” s+b, Summer 2008: Why facing up to climate change requires a revolution in business thinking.
  3. World Wide Fund for Nature and Booz & Company, “Reinventing the City: Three Prerequisites for Greening Urban Infrastructure,” (PDF) March 2010: More analysis and ideas on why we need to aggressively pursue urban sustainability.
  4. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/sustainability