When Exxon and Mobil merged last november in the largest corporate marriage ever, Texas became ground zero for Big Oil’s big consolidation. But the applause that likely would have greeted the $81 billion megadeal in decades past, when crude ruled, has been muffled by the realities of a new century. For one thing, Texas now has an Information Age economy driven by tech-related businesses. So Even Bigger Big Oil doesn’t pack the same wallop it once did in a state that also serves as home base for the nation’s largest computermaker (Dell), telecommunications company (SBC Communications), and supplier of computer chips for printers and cell phones (Texas Instruments). Furthermore, the rock-bottom oil prices of 1998 and intense international competition drove Exxon and Mobil together; they and other big oil companies concluded they had no choice but to get bigger to survive and prosper in the future. Ironically, in Exxon and Mobil’s case that meant picking up pieces of the past and putting back together fragments of Standard Oil Company—Exxon and Mobil each trace their lineage to the monopoly built by John D. Rockefeller, Sr.—which the U.S. Supreme Court broke up in 1911. That’s led some to dub the merger “Rockefeller’s Revenge.”
And revenge can be sweet. Certainly there are perks to having the world’s largest oil company call Texas home. The powerful ExxonMobil behemoth has a huge presence here: Its corporate headquarters are in Irving, the combined operation is consolidating its exploration and production company and chemical company in Houston, and it will operate 1,700 Exxon- or Mobil-branded stations across the state. The merged company is so big, in fact, that it had to hold its annual meeting in late May at the Morton H. Meyerson Symphony Center in downtown Dallas.
Not everyone is clearly benefiting, however, as the Tiger and the Winged Horse tackle the task of welding themselves into a leaner, competitively meaner animal. In some cases, it’s too early to tell what the consequences will be. Take philanthropy. In Texas, pre-merger Exxon and Mobil have each been important corporate donors; past recipients of major gifts include the Texas A&M University Foundation, the Nature Center in Baytown (where Exxon operates a huge refinery) and the Dallas Zoo, which last year opened its $4.5 million Exxon Endangered Tiger Habitat. So far, the A&M Foundation and the Dallas Zoo haven’t seen their funding levels change. Other institutions are optimistic in theory, since this is the first year the companies will make gifts as one corporation instead of two. Mobil has been a major contributor to the arts, while Exxon has concentrated on civic organizations, education, and the environment, where it’s been the nation’s single largest corporate giver (not surprising when you remember that “Valdez” often follows “Exxon” in our collective memory).
Speaking of the environment, watchdog groups are quick to point out that Exxon and Mobil, first separately and now together, oppose the “Kyoto protocol,” which would impose mandatory restrictions on the use of fossil fuels because of fears about global warming. Public Citizen, for one, warns that megamergers in the oil business ultimately will give companies more political power to lobby against tougher environmental regulations.
In the fullness of time, fallout from the creation of ExxonMobil will be evident across the board. For now, here’s how the winners and losers are stacking up.
Even though Exxon moved its corporate offices from New York to the Dallas suburbs ten years ago, Big D has really been a Mobil town. Before the merger, the company had a high-profile presence around the city—its red neon Pegasus icon atop the Magnolia Building at Commerce and Akard streets is a landmark—and employed about 2,300 people in Dallas, the second-largest concentration of workers outside its home base of Fairfax, Virginia.
All that’s changing, though. Dallas may be able to brag that it has the headquarters of the world’s largest oil company in its back yard, but Houston has gotten the real glory in the form of thousands of jobs. When the merger was first announced, Exxon and Mobil forecast that 9,000 jobs would be cut company-wide; in December the number was jacked up to 16,000. The company is still in the process of figuring out who’s being cut and transferred and which cities will be affected, but it has been reported that about 2,000 Dallas-area jobs will be shifted to Houston, where Exxon had already employed 12,800. By contrast, only about 400 people work at ExxonMobil’s corporate offices in Irving.
But Dallas is losing more than Mobil jobs; it’s also continuing to lose its luster as an energy business center and an E&P (exploration and production) town where oil company logos once decorated the tops of skyscrapers and where a popular prime-time soap opera documenting the wheelings and dealings of ruthless oilman J. R. Ewing was set (somehow, a TV show called Houston, with Ewing Oil ensconced in a Post Oak highrise, doesn’t have quite the same cachet). On the other hand, Houston, which had its economy battered by the oil industry in the 1980’s bust, is getting its luster back. Bill Gilmer, an economist in the Houston branch of the Federal Reserve Bank of Dallas, says that oil directly and indirectly supports more than half of the city’s 2 million jobs. So-called “upstream” jobs at company headquarters and production units, where key decisions are made, account for 56,000 jobs in Houston—nearly four times more than Dallas, Gilmer estimates. “Houston has recreated its role as the energy capital not only of Texas but of the world,” says Bernard Weinstein, the director of the University of North Texas’ Center for Economic Development and Research. “It’s clear that Dallas has been the loser.”
Winners: Top brass
For Lee Raymond And Lucio Noto —the former CEOs of Exxon and Mobil, respectively—the megamerger means megabucks. Now the chairman and the vice chairman of ExxonMobil, respectively, they received special bonuses (as did several senior vice presidents) for their efforts in completing