The Global Petroleum Industry: Varied Ethical Factors Encountered by International Oil Companies

Date:   Feb. 6, 2019                                   
Presenter:    Calton B. Dallas                                                                          
Moderator:   Isam Sakati
Neil Funnell introduced the incoming chairman of The Ethics Society, Gordon Haist, USCB philosophy professor. He will take over from Gerry Schroeter,  Neil Funnell and Isam Sakati, who are retiring from the co- chairmanship after serving for several years. 

Isam Sakati, a member of the executive committee, introduced the speaker: Carlton Dallas, former Chevron executive whose last assignment before retirement was headquartered in Cape Town, South Africa, where he was manager for Chevron operations in 35 countries. 

Carlton Dallas recalled watching baseball with his father and coming to admire Jackie Robinson and the Dodgers. He recalled as well his family’s promotion of education and a work ethic. He expressed gratitude for the many international opportunities he has experienced in his lifetime. 

A thought Carlton offered several times during his presentation: Corporations like Chevron have the objective to build value for their shareholders; therefore, if the general public wants other behavior from them, the public must motivate elected officials to make the rules that enforce such behavior. 

He then gave out some basic information about the oil industry with slides, charts and graphs to help tell the story. 

Crude oil is used mostly for power, he said, so the price of crude determines the price of gasoline. States impose widely varying taxes, and Europeans impose taxes so high that gasoline in Europe costs twice as much as it does in this country. Showing a map of the United States with oil pipelines crisscrossing it, he warned that the potential for terrorism is always with us, despite the U.S. Strategic Petroleum Reserve’s three-day’s worth of oil on hand. He pointed out that for transport, oil pipelines are easier and cheaper than anything else, by far. 

The United States is number one in the world in energy production. In addition, the federal Comprehensive Auto Fleet Efficiency (CAFE) standards for continual decreasing miles-per-gallon for vehicles have been the big change that has led to this country’s energy independence. 

Among the ethical challenges of working internationally is corruption, the simple practice of many officials from other countries to require bribes for permission to act. (He said Chevron resisted bribes as a matter of policy throughout.) To many officials of other countries, though, the United States is equally corrupt because campaign contributions have the same effect. It’s a question of point of view, he said. 

From the audience Carlton heard many questions and comments about the impact of fossil fuel on the carbon in the atmosphere and carbon’s impact on climate change. 

From the audience:
The planet’s climate is changing and the population is suffering because of it. Why are we expanding the oil industry? We export gas and coal to China. We need to get out of the dirty business. We have the technology to provide energy differently. It’s a matter of will. Is it ethical for the fossil fuel businesses to continue to operate for the profit motive only? Shouldn’t they make more investment in alternative energy? Should we impose carbon taxes? 

More from the audience: Years ago when industries were polluting the rivers, we made them to spend money to stop that. Now the oil industry is dumping carbon into the atmosphere for free, without paying the cost that the rest of us are facing from the climate change it’s causing. 

Carlton did not disagree with the premise of the questions. He asked the audience some questions:
1) The Paris Accord required the United States to help poorer countries pay the price of conversion to clean energy; how many of you are willing to do that?
2) The Chinese produce cheaper solar panels than the United States; are you willing to pay more in order to foster the solar energy industry here?
3) Is there any petroleum in your portfolio?
4) If you believe an informed public can influence public officials to take action to reduce the impact of carbon, how do you recommend that the public be sufficiently informed to push for that change? 

He left the audience with this: Businesses are responsible for value to their shareholders. Citizens who believe elected officials must direct business to policies that are in the public’s long-term interest must act through our political system. 

Thanks to Carlton for his most interesting, informative and thought-provoking presentation and for stimulating ongoing discussion.  Thanks also to Isam Sakati for Moderating and to Fran Bollin for her prompt, well edited and concise summary of this meeting.