Petroleum and Oil Essay

The case titled “ExxonMobil and the Chad/Cameroon Pipeline”, examines two large oil businesses merging together to finish an immense development project which spanned for approximately 25 to 30 years. In 1998, both Exxon and Mobil both respectively saw great success as major companies at the time with each company performing multi-billion dollar operations. In 1997 Exxon was achieving a large net income of $8. 5 billion with revenues soaring as high as $137. 2 billion, achieved a “AAA” debt rating, and also shelling out 5. 4 million barrels of gasoline on a daily basis for huge profits.

In contrast, Mobil thrived by building a strong reputation as well. The company saw revenues of $65 billion and achieved a net income of $3. 3 billion; shelling out 3. 3 million barrels of gasoline daily. In 1996, Shell, Elf and ExxonMobil signed a memorandum with the Chadian and Cameroonian governments which provided the sanctioning of a project which involved oil drilling for roughly 25-30 years. Their vision was to expand oil fields in the southern region of Chad by hauling out 300 wells of oil in the Doba Basin and as well building a 650-mile underground pipeline channel from Chad to Cameroon due to Chad being landlocked.

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The pipeline would move the oil to the coastline of Cameroon and be transported off to various parts of the world. The price of the development was $3. 5 billion generating one billion barrels of oil. According to the World Bank, they approximated that the development would produce $2 billion for Chad, $500 million for Cameroon, and $5. 7 billion for ExxonMobil and its associates. Ironically, the union of ExxonMobil was reminiscent of John Rockefeller’s Standard Oil Company which split apart in 1911 when the antitrust powers that be forced them to divide into two separate companies.

This resulted in Standard Oil of New Jersey ultimately becoming Exxon and Standard Oil of New York becoming Mobil. Exxon was still recuperating from the 1989 Valdez oil leak in Alaska when the tanker collided with a reef while avoiding icebergs. Consequently, the tanker that collided with the reef leaked 53,094,510 gallons of oil that enclosed 460 miles in total. It took four years to clean up the spill albeit some Alaskan shores were still enclosed with oil at the commencement of the 21st century. This occurrence had a significant blow on the environment and killed several wildlife and was very harmful to the environment.

The African Forest Action Network (AFAN) was nervous that the oil pipeline channel could potentially threaten forests, watersheds and villages. The pipeline channel would interconnect with 17 vital rivers where it would be used for the utilization of drinking, bathing, and washing. It would also cause danger to marine life as well as lob waterfalls which were very rare. It was as well a threat to coral reefs, forests, and mangroves which were all imperative in sustaining communities. For this reason, it was imperative that Lee Raymond, CEO of ExxonMobil decide on which direction to go to solve the issue.

The ethical issue that is perceptible in this case is the pipeline channel causing danger to the Pygmies (indigenous people of Cameroon). The development can potentially wipe out the pygmies’ habitat making them have to evacuate. If the development is to be undergone, the businesses will have to initially clean forests to thus start on with the oil drilling process. The Pygmies could definitely do with their forests due to the fact they need to survive and are hunters not farmers. They voyage in groups to capture food for their rural community and the majority of the foods they eat are in the forests.

An additional ethical issue that is apparent in the case is the pipeline channel intersecting with several vital rivers. These rivers are vital to many people who rely on these rivers for water consumption and washing. Not only would the pipeline channel have an effect on the people but as well the terrain. At the same time as the oil is being transported through the pipeline channel, a little oil in all probability would leak which could cause earthquakes which would harm people and the environment. There would in all likelihood be effects on the company, investors, employees and the consumers.

The effect on company would clearly be a profitable one for the reason that they would make money regardless of the harm it causes. Thus, investors would be the equivalent to that of the company since their investments would be paying dividends and they would ultimately gain profits. In regards to the employees, it would have an effect on the employee’s principles and ethics since they would comprehend that they were engaging in something wrong however, they would persist in doing so because they are employed to do so and because they make money because of it.

In regards to the consumer, there would be lower gas prices if the company was to indeed complete the development. If not, there would be high gas prices. It would convey a negative message to society for the reason that people would be irritated at ExxonMobil causing people to be banished from their communities due to the oil project. There is an alternative that ExxonMobil can consider that is not only moral but can also help alleviate the situation they are in right now.

If ExxonMobil comes to a decision to put off the project they would not end up damaging the environment and dislodging the indigenous people of Cameroon. ExxonMobil could perhaps look for other areas in Cameroon or Chad that are not occupied by citizens and drill the oil from there. As well they ought to keep away from cutting down forests because the forests have many benefits and instead utilize other means. Possible solutions include canceling the project altogether or improving the existing plan before any more oil revenues flow.

As mentioned previously, ExxonMobil can utilize the alternative of looking for other areas in Cameroon or Chad that are not occupied to further pursue their project as to avoid all the risks and negative impacts it can have for people in that area. There are numerous strategies that Lee Raymond could make use of to conquer possible negative feedbacks; one strategy being the Steven Covey Principle-Centered Leadership which says that principles should guide leaders. If Lee Raymond were to follow this approach, he would recognize that making a profit would not matter if it were causing harm to human beings and the environment due to morality.

An additional approach that Lee Raymond could take advantage of is the Values-Based Leadership which seeks to understand the values of leaders and followers. If Lee Raymond was able to show some sort of sympathy he would realize that putting people and then environment in danger for ExxonMobil to make a profit would be wrong. Ultimately, if he employs the Values in the Values-Based Leadership approach and the Steven Covey Principle-Centered Leadership approach it would be significant in the process of making ethical decisions.

References

1) Wicks, A., Freeman, R., Werhane, P., Martin, K., (2010). Retrieved, Thursday, October 20th, 2011 from Business Ethics: A Managerial Approach. New Jersey: Pearson Education Inc. Business Cycles and Employment Practice, Page 186-201 2)Wicks, A., Freeman, R., Werhane, P., Martin, K., (2010). Retrieved, Thursday, October 26th, 2011 from Business Ethics: A Managerial Approach PowerPoint (Chapter 5). New Jersey: Pearson Education Inc.

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