TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/042489/04248900.014

Text File | 1990-09-17 | 5KB | 93 lines

BUSINESS, Page 46

An Oil Slick Trips Up Exxon

Huge lawsuits and a budding boycott confront the company


    Not since the energy shocks of the 1970s has a Big Oil company
been so vilified. From corner filling stations to the halls of
Congress, Exxon came under attack last week for its role in the
Alaskan oil spill. In Washington leaders of two consumer groups
gathered near an Exxon station to call for a nationwide boycott of
the company's products. On New York's Long Island, Suffolk County
Executive Pat Halpin said the local government would cut its
contractual ties with Exxon as a supplier. In California a lawsuit
was filed that accused the oil company of boosting gasoline prices
to help pay the cost of cleaning up the spill. Across the U.S.
average gasoline prices since the spill have risen more than 8
cents per gal., to a three-year high of more than $1.04, at least
partly because of the interruption of shipments from the Alaskan
pipeline.

    Exxon helped fuel the anger last week, when the company's
Alaska coordinator, Don Cornett, admitted that the oil company
would add some of the cleanup costs to the price of its products.
Said he: "If it gets to the consumer, that's where it gets. It's
just like any other cost of doing business." Urging Exxon customers
to respond by cutting up their charge cards, Ed Rothschild,
spokesman for the Washington-based Citizen Energy/Labor Coalition,
declared, "Consumers do not have to be added to the list of Exxon's
victims."

    Until the grounding of the Exxon Valdez on March 24, the
largest U.S. oil company had been cruising along with a good
reputation and 1988 profits of $5.3 billion. But now Exxon faces
not only a public outcry but also a financial liability that could
dent its earnings and preoccupy its managers for years. Some 20
class-action lawsuits have already been filed on behalf of Alaskan
fishermen and businesses. The company is even getting something of
a cold shoulder on Wall Street, where last week it ran into
unexpected trouble selling a $110 million issue of two-year bonds,
a modest offering for a behemoth with annual revenues of $88.6
billion.

    Exxon's liability could be aggravated by its apparent
negligence in putting one of its largest tankers in the hands of
a known alcoholic, Captain Joseph Hazelwood, who may have been
drunk at the time of the accident. Last week Exxon's failure to
keep tabs on Hazelwood was underscored by Bruce Amero, a former
employee, who went public with claims that the captain was often
drunk on duty. Amero, who worked under Hazelwood as second mate
from 1980 through 1982, is suing Exxon for $2 million in damages
in New York State Supreme Court in Manhattan. Charging that
Hazelwood's "abuse and harassment" caused him to suffer a nervous
breakdown, Amero has testified that a bad joke had been making the
rounds in the Exxon fleet: "Where Joe Hazelwood is captain, Jack
Daniel's is the chief mate."

    Some oil-industry experts have alleged that Exxon's sluggish
initial response to the Alaskan accident was partly the result of
another corporate lapse: the reduction of its spill-management
staff during cost cutting in the mid-1980s. The company lost nine
of its top environmental and spill-control officers, including
scientist G.P. Canevari, the inventor of Corexit 9527, a commonly
used oil-slick dispersant.

    In an interview with TIME, Exxon President Lee Raymond
contended that the company has 1,000 employees trained in
spill-response measures and denied that the oil giant had grown
complacent. Said he: "The day before the spill happened, Exxon had
a reputation worldwide as an excellent operating company, and one
that was sensitive to all these kinds of issues. We are still the
same operating company, and we're still sensitive. In my view this
(spill) is an aberration."

    So far, Exxon's cleanup project, now under the command of the
U.S. Coast Guard, has suffered from disorganization. Last week
Dennis Kelso, commissioner of Alaska's Department of Environment
Conservation, charged that Exxon's efforts to clean up the beaches
have been "entirely inadequate." Only 21,000 bbl. of oil, barely
9% of the 240,000 bbl. that were spilled, have been recovered.
Authorities have already counted more than 160 sea otters and 1,300
birds that have died from the oil.

    The spill is likely to curb Alaskan development opportunities
for Exxon and other oil companies. On Capitol Hill legislation that
would have opened up the Arctic National Wildlife Refuge to oil and
gas exploration was shelved last week because of political outrage
over the spill, though supporters of development vow to push for
a bill at a later date.

    In many respects, blame for the spill could be shared by
everyone from heedless lawmakers to gas-guzzling American
consumers. But since Exxon is the most vulnerable and in many ways
deserving target of anger, the company no doubt hopes the cleanup
crews make substantial headway in the next few weeks on the waters
and beaches of Alaska.