Exxon Valdez Case Study

Lynn Luig

Exxon Valdez Case Summary

Background

John D. Rockefeller founded an oil corporation called Standard Oil in 1870. At the height of its success, in 1904, Standard Oil controlled 91% of production and 85% of final sales in the US, making John Rockefeller one of the wealthiest men in the United States to date. In 1911, the US government identified the corporation as a monopoly and it was forced to break into 34 smaller independent companies. Exxon was formed in 1972 from Jersey Standard which was one of the largest of these 34 companies.

Exxon continued to be one of the largest oil companies in the world, following in Rockefeller’s footsteps. In 1999 Exxon merged with Mobil to form what we know today as ExxonMobil, the largest company in the world. Its revenue for 2010 was over 383 billion USD. Through-out its history, Exxon has been criticized for greedy, neglectful practices towards US citizens and the environment. Exxon’s reputation is marked with deceit and corruption despite its efforts to regain public trust.

Problem

In 1989, the infamous Exxon Valdez oil spill occurred and the Exxon Shipping Company was unprepared for the crisis. It was not anticipated by the company or the Coast Guard which left both groups in a state of panic. The Exxon Valdez supertanker was on a path from Alaska to Long Beach, California with over 53 million gallons of crude oil aboard. The ship had been avoiding icebergs during the journey. But, three hours in it was punctured by Bligh reef in Prince William Sound spilling over 10 million gallons of oil into the water. There are many theories on what went wrong on the night of March 24th, 1989. This is a result of significant finger pointing.

Situation (SWOT) Analysis

Exxon was fortunate to have a few leaders who took control of the crisis. Don Cornet, who was the Alaska coordinator for Exxon at the time, took the initiative to go to the site of the spill immediately. He took charge of dealing with the media in Valdez at a media center that he set up. The decision to focus on clean up and the future of tourism as well as support for Valdez’s fishing industry also came from Cornet (with the help of George Mason, vice president of Alaska’s public relations firm). His response to this crisis granted him a promotion to Exxon’s public relations manager. Mason was responsible for developing a crisis plan and for attempting to save Exxon’s reputation by communicating with travel editors and managing news conferences as well as animal rescue efforts.

The CEO of Exxon at the time, Lawrence G. Rawl was counterproductive for Exxon’s public image. He avoided communication with anyone during the crisis. His attitude toward the media was poor and avoidant. He was responsible for running a corporation that had only profit in mind as he allowed the Exxon Valdez to make this trip with minimum staff. He did not accept any responsibility and he made no apologies for the loss of aquatic life or loss of business for fishermen or tourism. Additionally, Frank Lorossi served as the spokesperson in Rawls absence. Lorossi was responsible for the botched clean up job and was quick to place blame on the ship’s captain, Joseph Hazelwood.

With this unexpected crisis came the opportunity for Exxon to counteract its prior reputation and show the world that it was a thoughtful, philanthropic corporation. Exxon did take advantage of this opportunity by attempting to initiate a hasty clean up. Exxon has since developed a crisis strategy and strong prevention measures to avoid spills in the future. The Exxon Valdez spill has served as a lesson for all oil companies as a prodrome. Exxon has taken advantage of its experience with this catastrophe to help in oil spills that occurred later.

The environmental impact of this event threatens Exxon’s image to this day. Greenpeace has been demonstrating against Exxon since the spill and will continue. Exxon continues to suffer financial loss due to the spill. Also, despite their efforts, more spills have occurred on their account as early as April of 2012 in Louisiana.

Strategies (Decisions or Behaviors)

Without a crisis communication plan already in place, Exxon’s response to the oil spill was reactionary. Every decision that was made was made with limited resources or planning. Efforts to communicate with the media were often contrary to statements from other media sources. The clean up was attempted by over 10,000 workers, 1,000 boats and 100 planes and helicopters. The location and weather conditions in the area made it difficult to remove the oil mechanically. Hot water, high pressure and solvents were other methods that were used. The official cleanup effort lasted for over four years.

Exxon’s strategy seemed to be more about cleaning up the oil than taking responsibility for the spill to begin with. Their strategy could be considered a mix of apologia and image restoration. The CEO didn’t seem to want to face the bad news at all. Most of the blame by Exxon was placed on the ship’s captain although he was not steering the ship when it hit the reef (he was asleep in his quarters while the third mate, Gregory Cousins was in charge of navigation). They focused on captain Hazelwood’s history of substance abuse and possible intoxication during the event. Hazelwood was fired and found guilty by court of law.

Consequences (Results)

Over 200 miles of shoreline was heavily covered in oil and oil can still be found on the shores today. No human lives were lost as a direct result of the oil spill but countless aquatic lives have been lost. An estimation of 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, 22 killer whales, and billions of fish have been lost to the spill. Due to location of the spill, an area once very rich with ocean life and fairly still waters at that time of year, the Exxon Valdez spill was more costly to aquatic life than any other spill on record. The cost to the corporation has been estimated at about 2.5 billion USD for cleanup costs and legal consequence.

Comments

In my opinion, Exxon’s response to this crisis is an example of how corporate greed can negatively impact a large corporation and its publics if faced with a crisis. To expect that shipping millions of gallons of crude oil over tricky water ways wouldn’t eventually end in a spill is foolish. If completing such a risky maneuver is essential to profits, it seems obvious and logical that Exxon should have had a crisis plan in place in case of a spill. But, hind sight is 20/20. I respect that they made clean up a priority and continue to do so today.

The lesson that should be learned from this event is to have a symmetric communication plan with the publics that you serve. Always respond swiftly to a crisis with appropriate human emotion and take responsibility for the loss of life or damage no matter what. Exxon now holds “frequent, extensive oil spill drills.” They have been proactive in developing crisis strategies for other companies as well. But Exxon continues to proclaim that they “took immediate responsibility” when in fact they did not. They also claim that “there has been no long term damage caused by the spilled oil” according to their own contracted scientists.

On their website, Exxon seems to express pride in new drug and alcohol testing programs and in the fact that they restrict “safety-sensitive positions to employees with no history of substance abuse.” If Exxon wasn’t already decades deep in deceit, I would recommend that they support captain Hazelwood and accept some of the blame for the spill itself. Hazelwood may have had a drinking problem in the past but he is human and does not deserve to accept all of the blame. He was in fact a documented, experienced and trustworthy captain who had his career and most likely his personal life destroyed by this event alone while the man who actually drove the ship into the reef continued to have a flourishing career. I would also recommend that they put live footage of the coastline on their website and continue to update the world, using social media, on the actual condition of the beaches and sea life.

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5 Responses to Exxon Valdez Case Study

  1. karobinson5 says:

    Lynn,
    I do agree with your points in the case. I didn’t think of the apologia theory as a strategy for Exxon. This theory does fit perfectly. Exxon definitely did not apologize. The company did communicate a swift clean-up followed by efforts to maintain tourism for Alaska. Captain Hazelwood was blamed and terminated by the company. For a short time these actions drew the attention away from Exxon and redefined the situation. I don’t believe the company was forgiven. I think that the general public just didn’t feel connected to the situation. The remote location led to apathy during the lengthy clean-up. I think it became old news to those not in Alaska, not affected by the spill, or not environmentalist. It was that people didn’t care and became dissociated with the occurrence. Great idea using the apologia theory with this case.

  2. djwindholz says:

    I liked your comments about Hazelwood. I think he should have been fired, but so should have some others. The blame shouldn’t have all been placed on him. I also liked how you looked on their website and saw how they pride themselves on having drug and alcohol free employees.

  3. l992 says:

    I agree with a lot of the your comments about this case. I agree that Exxon did not react as quickly as they could have, and I don’t think they needed to lie about reacting as fast as possible either. I feel like this was a huge learning experience for Exxon, because they made quite a few mistakes in the beginning, but they as well as other oil companies have learned from them. The CEO should have appeared in front of the public and been much more apologetic, and Exxon should not have put all of the blame on Hazelwood either. I think it was one of those situations, where they were never aware that he had alcohol problems until the oil spill, and then Exxon dug dirt up on Hazelwood to cover their own behind.

  4. nnfisher2343 says:

    I agree with what you stand point is on the subject. I felt like we had alot of the same comments! good work!

  5. Pingback: Exxon crisis | Seigneux

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