An Oil Slick Trips Up Exxon

By Barbara Rudolph

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.

CHART: NOT AVAILABLE

CREDIT: TIME Chart by Cynthia Davis

[TMFONT 1 d #666666 d {Source: Oil & Gas Journal}]CAPTION: Average weekly price for self-service unleaded gasoline, per gal.

With reporting by Stephen Pomper/New York, with other bureaus