Private Empire: ExxonMobil and American Power by Steve Coll

per barrel; adjusted for inflation, that was the lowest price the world had enjoyed since the 1960s. 22
    Disciplined Exxon could weather such a sudden price collapse. After the cost reduction binge of the 1980s, Raymond had reduced Exxon’s operating expenses an additional $1.3 billion annually in the five years until 1997. Less-efficient companies such as Mobil struggled. Nobody knew how long prices might stay so low. The long-term challenge of resource nationalism compounded the anxiety. All this coaxed Lou Noto back to the possibility of a merger.
    In June 1998, he attended a meeting with Lee Raymond organized by the American Petroleum Institute (A.P.I.), the Washington-headquartered oil industry trade group. Raymond raised the possibility of a minor deal to combine Exxon and Mobil refinery operations in Japan.
    “Maybe we should talk about that,” the Exxon chief said.
    “That and other things,” Noto replied.
    Mobil’s top Management Committee met in New York every Tuesday and Thursday. One morning that summer, Noto arrived and said, “Guess who I had dinner with last night? I had dinner with Lee Raymond.”
    The news shocked his colleagues. Exxon was more than twice Mobil’s size by revenue. Layoffs would be the one inevitable by-product of such a combination, and the job losses would reach the highest ranks of the Mobil hierarchy. “There was a massive anxiety,” an executive involved recalled. They worried as well about the culture shift if conservative Exxon took charge; by comparison, Mobil had been loosely governed.
    That summer, John Browne advanced a fallback plan to merge with Amoco, the offspring of Standard Oil of Indiana, headquartered in Chicago. Browne and Laurance Fuller, Amoco’s chief executive, held a series of private dinners in a back room of Le Pont de la Tour, the London restaurant, where Fuller “could smoke his cigarettes and we could all drink Puligny-Montrachet,” as Browne recalled it. “Remarkably, no one noticed.”
    On August 11, 1998, they announced that their companies intended to merge, with Browne to be in charge of the successor corporation. The deal would create the largest corporation in Great Britain and one of the largest private oil companies in the world.
    Browne’s announcement galvanized his competitors. “It was as if the industry had been standing by waiting for someone to make the first move; it felt like we had broken a dam,” as he put it. 23 Every North American and European leader of a large oil corporation seemed to conclude simultaneously that his company needed to merge to get bigger. Chevron and Texaco would soon combine, as would Conoco and Phillips, and Total with Petrofina and Elf.
    Raymond believed that Exxon was primed for transformational change. As he had taken full control during the mid-1990s, he had concluded that the corporation had a management that could handle a lot more than it was being asked to do. The post
-Valdez
reformers were in place. They had restructured, streamlined, and reduced costs. They were down to “the fine grind,” as he put it to his colleagues. Now what? How could they convert their emerging efficiency into a strategic leap, something that would have global scale?
    Around this time, DuPont and Exxon discussed a swap of DuPont’s Conoco oil division for Exxon’s chemical division, but the idea did not ripen. Raymond’s rationale for any proposed merger was not complicated. He ran a resource company. Replacement of resource stocks was fundamental; an acquisition at the right price was a common way for resource companies to replace reserves and grow. It was a part of Exxon’s own history—Standard Oil of New Jersey had grown by acquiring Humble Oil and Refining and other reserve-rich firms. In this case, a big merger might provide a new source of leverage for Raymond to accelerate the drive for efficiency and accountability, the vanquishing of bureaucracy, that he had started after the
Valdez
debacle. It would be