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Big Oil Won't Let the Developing World Kick the Habit

In the coming decades, virtually all of growth in energy consumption will be in developing countries, and corporations like Exxon are doing their best to fuel the shift.

| Tue May 27, 2014 2:08 PM EDT

This story first appeared on the TomDispatch website.

In the 1980s, encountering regulatory restrictions and public resistance to smoking in the United States, the giant tobacco companies came up with a particularly effective strategy for sustaining their profit levels: sell more cigarettes in the developing world, where demand was strong and anti-tobacco regulation weak or nonexistent. Now, the giant energy companies are taking a page from Big Tobacco's playbook. As concern over climate change begins to lower the demand for fossil fuels in the United States and Europe, they are accelerating their sales to developing nations, where demand is strong and climate-control measures weak or nonexistent. That this will produce a colossal increase in climate-altering carbon emissions troubles them no more than the global spurt in smoking-related illnesses troubled the tobacco companies.

The tobacco industry's shift from rich, developed nations to low- and middle-income countries has been well documented. "With tobacco use declining in wealthier countries, tobacco companies are spending tens of billions of dollars a year on advertising, marketing, and sponsorship, much of it to increase sales in... developing countries," the New York Times noted in a 2008 editorial. To boost their sales, outfits like Philip Morris International and British American Tobacco also brought their legal and financial clout to bear to block the implementation of anti-smoking regulations in such places. "They're using litigation to threaten low- and middle-income countries," Dr. Douglas Bettcher, head of the Tobacco Free Initiative of the World Health Organization (WHO), told the Times.

The fossil fuel companies—producers of oil, coal, and natural gas—are similarly expanding their operations in low- and middle-income countries where ensuring the growth of energy supplies is considered more critical than preventing climate catastrophe. "There is a clear long-run shift in energy growth from the OECD [Organization for Economic Cooperation and Development, the club of rich nations] to the non-OECD," oil giant BP noted in its Energy Outlook report for 2014. "Virtually all (95 percent) of the projected growth [in energy consumption] is in the non-OECD," it added, using the polite new term for what used to be called the Third World.

As in the case of cigarette sales, the stepped-up delivery of fossil fuels to developing countries is doubly harmful. Their targeting by Big Tobacco has produced a sharp rise in smoking-related illnesses among the poor in places where health systems are particularly ill equipped for those in need. "If current trends continue," the WHO reported in 2011, "by 2030 tobacco will kill more than 8 million people worldwide each year, with 80 percent of these premature deaths among people living in low- and middle-income countries." In a similar fashion, an increase in carbon sales to such nations will help produce more intense storms and longer, more devastating droughts in places that are least prepared to withstand or cope with climate change's perils.

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The energy industry's growing emphasis on sales to these particularly vulnerable lands is evident in the strategic planning of ExxonMobil, the largest privately owned oil company. "By 2040, the world's population is projected to grow to approximately 8.8 billion people," Exxon noted in its 2013 financial report to stockholders. "As economies and populations grow, and living standards improve for billions of people, the need for energy will continue to rise... This demand increase is expected to be concentrated in developing countries."

This assessment, explained Exxon CEO Rex Tillerson, will govern the company's marketing plans in the years ahead. "The global business environment continues to provide a mix of challenges and opportunities," he told financial analysts at the New York Stock Exchange in March 2013. While the demand for energy in the developed economies "remains relatively flat," he noted, "energy demand for the economies of the non-OECD countries is expected to grow about 65 percent to support anticipated growth."

In recognition of this trend, Exxon has undertaken a wide variety of initiatives intended to boost its sales capacity in China, Southeast Asia, and other rapidly developing areas. In Singapore, for example, the company is expanding a refinery and petrochemical facility that make up its "largest integrated manufacturing site in the world." The refinery is being modified to produce more diesel, so as to better service the growing fleets of trucks, buses, and other heavy vehicles in the region. Meanwhile, the hydrocarbon processing facility at the chemical plant is being doubled to meet the rising demand for petrochemicals used in making plastics and other consumer goods, especially in China. ("China alone is expected to represent over half of global demand growth" for these products, Tillerson observed last year.)

To promote its products in China, Exxon has established a "strategic alliance" with the China Petroleum and Chemical Corporation (Sinopec), one of China's state-owned energy giants. A key goal of the alliance is the establishment of an "integrated world-scale refinery and petrochemical complex" in eastern China which, Exxon officials noted, is to "become a major marketer of petrochemicals throughout China and petroleum products throughout Fujian Province." A major component of this joint effort, the Fujian Refining and Ethylene Integrated Project, came on line in September 2009.

Exxon is also expanding its capacity to supply liquefied natural gas (LNG) to Asia. In partnership with Qatar Petroleum, it has built the world's largest LNG export facility at Ras Laffan in Qatar and is building a mammoth LNG operation in Papua New Guinea. This $19 billion project, which began operation in April, includes a 430-mile pipeline to deliver gas from the island's interior highlands to an export terminal near Port Moresby, the capital. "The project is optimally located to serve growing Asia markets where LNG demand is expected to rise by approximately 165 percent between 2010 and 2025," said Neil W. Duffin, president of ExxonMobil Development Company.

Next on the company's agenda is a plan to draw on the natural gas being extracted in ever greater quantities from domestic shale formations in the United States via hydro-fracking and convert it into LNG for export to Asia. Although various American politicians have been pushing the strategic export of such supplies to Europe to "rescue" that continent from its reliance on Russian gas, Exxon has other ideas. It sees Asia, where gas prices are higher, as the natural market for its LNG—and US foreign policy be damned. "By exporting natural gas," Tillerson told the Asia Society in June 2013, "the United States could shore up the energy security of Asian allies and trading partners and stimulate investment in American domestic production."

Big Energy's "Humanitarian" Mission

In promoting such policies, Exxon's executives are careful to acknowledge that growing concerns over climate change are generating increased resistance to fossil fuel consumption in Europe and other First World areas. When it comes to the rest of the planet, however, such concerns, they claim, should be outweighed by a "humanitarian" impulse to provide cheap fossil energy to poor people. Drawing on the arguments of Danish environmental renegade Bjørn Lomborg, author of The Skeptical Environmentalist, they argue that tending to the needs of the poor constitutes a greater priority than curbing global warming. "We must also recognize that there is a humanitarian imperative to meeting these growing global energy needs," Tillerson typically asserted in 2013.

Asked why global warming shouldn't be of greater concern, the Exxon CEO parroted Lomberg's anti-environmental perspective. "I think there are much more pressing priorities that we... need to deal with," Tillerson told the Council on Foreign Relations in June 2012. "There are still hundreds of millions, billions of people living in abject poverty around the world. They need electricity... They need fuel to cook their food on that's not animal dung... They'd love to burn fossil fuels because their quality of life would rise immeasurably, and their quality of health and the health of their children and their future would rise immeasurably. You'd save millions upon millions of lives by making fossil fuels more available to a lot of the part of the world that doesn't have it."

Although the leaders of the other giant energy firms, including BP, Chevron, and Royal Dutch Shell, are less outspoken than Tillerson, they are pursuing a similar marketing strategy. "Demand growth [for petroleum products] comes exclusively from rapidly growing non-OECD economies," BP noted in its recent report on the global energy outlook. "China, India, and the Middle East account for nearly all of the net global increase." Like ExxonMobil, BP and the others are hard at work expanding their capacity to sell fossil fuels in these growing markets.

Nor are only the oil and gas companies pursuing this strategy. So is Big Coal. With coal demand declining in the US, thanks to the growing availability of low-cost natural gas generated by fracking, the coal firms are shipping ever more of their American output to Asia, which will contribute significantly to increasingly the carbon emissions there. According to the Energy Information Administration (EIA) of the Department of Energy, US coal exports to China rose from essentially zero in 2007 to 10 million tons in 2012. Exports to India increased from 1.5 million to seven million tons and to South Korea from virtually nothing to nine million. Exports to just these three countries jumped by more than 1,000 percent during these years.

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