This unprecedented campaign to make Chevron the poster child of corporate irresponsibility has already persuaded pension funds in California, Maryland, New York, and Pennsylvania to consider selling a total of $12 billion in Chevron shares on the grounds that the firm is mismanaging its operations around the globe. The prime focus of this ongoing anti-Chevron effort has been the company's annual shareholder meetings, but protests at the Richmond refinery and a series of movie and PR stunts have been also been effective tactics.
The brains behind the campaign is a small firecracker of a woman, Antonia Juhasz, director of a special new Chevron program for Global Exchange, the San Francisco activist organization. Author of the book entitled The Tyranny of Oil, Juhasz brings to the campaign a depth of knowledge about the oil industry and a penchant for understanding how the media works. It was her idea, for example, to create an alternative shareholder report — The True Cost of Chevron — released in time for Chevron's annual shareholder meeting this past spring. The report, to which more than a dozen activist groups contributed, chronicles environmental and social issues confronting Chevron around the globe. Among other things, it pokes fun at Chevron's "Human Energy" PR campaign.
In its billboards and television ads, Chevron paints itself as part of the solution, and implies that the ingenuity of California and its citizens are already solving the challenges that climate change poses to society. One subtext of this advertising campaign is that global warming can be solved by everyday people. Indeed, the contented Americans depicted in the ads vow "I will use less energy," "I will leave the car at home more," and "I will finally get a programmable thermostat." The True Cost of Chevron campaign mocks this notion, by depicting put-upon villagers who stoically vow, "I will not breathe when outside," "I will give my baby contaminated water," and "I will ignore the toxic waste pits in my village."
"Chevron is emblematic of an industry that is out of control," Juhasz said. "They are not the worst oil company, but they hold themselves up to be a model corporate citizen, and they don't deserve it." Why then focus exclusively on Chevron? Focusing on one company makes the story more manageable, said Juhasz, exhibiting a clear understanding of modern campaigning techniques. And Chevron is everywhere, she noted, which allows activists to go to gas stations and distribute propaganda, or engage in publicity stunts that take advantage of the company's global profile.
"Our issues of peace, democracy, and environmental sustainability overlap with Chevron's actions around the globe," she said. "We want to take a closer look at the local impacts Chevron has globally in order to put pressure on them to be a better corporate citizen here, and everywhere else they operate. Our goal is to build a regional network not so much aimed at Chevron directly, but rather at policymakers who can adopt better regulations governing big oil."
While each of the activist organizations involved in this campaign has a different regional focus, they regularly hold conference calls and coordinate strategy to maximize impact. Their common theme is that the issues haunting Chevron in Richmond, Ecuador, Burma, Kazakhstan, and Nigeria are all really the same, and stem from a corporate culture that is out of sync with the values of the Bay Area.
Chevron repeatedly declined to comment on the charges leveled against it by activists. This should come as no surprise since outgoing CEO David O'Reilly suggested at the company's last shareholder meeting that the report pulled together by Global Exchange and various other groups should be thrown in the trash.
The company known as Chevron was once part of Standard Oil, which was started by the infamous Rockefeller family, and broken up under the Sherman Antitrust Act. Successor companies of Standard Oil — which once controlled 88 percent of US oil flows — comprised what were known as the "Seven Sisters" and included Exxon, Mobil, BP, Shell, Gulf, Mobil, and Standard Oil of California, which ultimately became Chevron. The sequential subsuming of Gulf (1985), Texaco (2001), and then Unocal (2005) allowed Chevron to become the world's second-largest oil company. Just 36 countries have a larger gross domestic product than Chevron. Based on annual revenues, it is California's largest and the world's fifth-largest corporation, with operations in 122 countries. Chevron was the second-most-profitable US corporation last year, edging out General Electric.
The campaign against the oil company can be seen within the context of a larger global examination of what Karin Lissakers, director of the Revenue Watch Institute, calls the "paradox of plenty." Lissakers and others describe this paradox as the persistent inability of resource-rich countries to transform their wealth in oil and other extractive industries into economic development that benefits their citizens.
The Revenue Watch Institute is hardly a left-leaning organization. Its prime constituency is the financial community, and it is one of many groups behind the so-called "publish what you pay" movement, which calls for greater transparency in where revenues from natural resources go when transferred from private to public hands. "We focus on the money flows, the revenue streams, and the distribution of those revenues in resource-rich countries," said Lissakers, whose institute is not directly involved in the anti-Chevron campaign. "What we campaign for are international good practices in all extractive industries. We should not have different standards for different countries."
Lissakers used Uganda to illustrate her point. Possible oil revenue in that central African nation represents $50 billion in total potential value, a large percentage of which could, if managed properly, provide immense economic opportunity in that impoverished country. "We want to make sure the state captures a significant part of that value. Our ultimate goal is to have access to country-by-country reporting in order to figure total revenues, value of products, and the percentage of this wealth flowing to governments."
In Lissakers' view, interestingly enough, mining companies are "way ahead of the curve" when it comes to such corporate social responsibility issues, while the oil sector — the most profitable of all natural resource businesses — is a clear and persistent laggard. But she believes big oil is going through an evolution in its thinking. "BP and Shell were instrumental in getting the transparency examination off the ground, but the response from US oil companies has been unenthusiastic from the very beginning," she said. And among US oil companies, Chevron's attitude makes it unique, critics say.
"When there is a problem, they send a lawyer instead of engineers," said Juhasz of Global Exchange. "They are dog-headed and would rather litigate than fix the problem."
This penchant for litigation is evident from the depths of the Amazonian jungle to Chevron's own backyard in nearby Richmond. Indeed, of the five refineries operating in the Bay Area, Chevron's Richmond facility is the worst polluter, according to the Bay Area Air Quality Management District. The company has yet to bring its vintage refinery, surrounded by immigrant residential communities, up to snuff on modern pollution controls and practices. Apparently, it would rather fight in court.
Yet the unprecedented coordination between its critics is a big test for both Chevron and the groups. If Chevron prevails, it may conclude that it can continue to conduct business as usual. But if the activists prevail, the entire industry might have to clean up its act — becoming part of the solution to not only climate change but the persistent poverty and human rights woes that plague much of the oil-producing world.
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Across the globe, many of the very same issues that haunt Chevron in its global operations are everpresent at its century-old Richmond refinery.
In Richmond, the oil company's chief critic has long been Communities for a Better Environment, a grassroots group focused on industrial pollution issues impacting low-income communities of color. The group's key objective these days is to stop Chevron from processing dirtier crude such as Alberta tar sands at the Richmond refinery. Tar sands are one of the dirtiest forms of crude oil. Development contributes to clear-cutting of the Boreal Forest in Canada — the largest terrestrial carbon sink in the world — and emits three to five times as many greenhouse gas emissions as other more traditional forms of crude oil.
The company recently suffered a loss when the Contra Costa Superior Court ruled that Chevron's environmental impact report assessing proposed changes at the refinery was inadequate. At the moment, it is unclear how the company will respond. The ruling has halted construction activity necessary to process tar sands, stranding 1,100 union workers, pitting their jobs against the activists and local citizens worried about public health.
Another key environmental issue at Richmond is the burning of waste gases. While some refineries recycle these waste gases — reducing such flaring by 80 percent — Chevron has historically maintained that such practices were "not economically feasible" at the Richmond site. But Communities for a Better Environment has estimated that revenue generated by just seventeen minutes of Richmond refinery operations could fund the $100 million upgrades necessary to make the facility state-of-the-art when it comes to these gases.
Jessica Tovar, a local organizer for Communities for a Better Environment, pointed out that residents of Richmond's nearby Iron Triangle neighborhood suffer from asthma, cancer and other acute symptoms on a daily basis. "Chevron is not the only polluter, but their refinery is the largest [pollution source]," Tovar said, "and is one of the largest contributors to global warming in the San Francisco Bay Area." She noted that Chevron itself has described the boilers at the Richmond facility as "vintage," and Tovar added that the thirty- to fifty-year-old pipes are "more likely to create explosions than new ones." Since its environmental impact report was rejected, Chevron has "postponed indefinitely" all promised upgrades to the Richmond refinery complex. "The most important upgrades from a public safety perspective are now not going forward," she said.
Referring to the $100 million upgrade needed to halt the flaring of waste gases, Torm Nompraseurt, a senior organizer for Asian Pacific Environmental Network, said, "This system would serve the community for a long, long time. Our response to Chevron is that our lives are not that cheap — even if we are poor."
For Nompraseurt, the prime issue in Richmond is that Chevron is not following the law when it comes to disclosing its true plans through the environmental impact report process. "Chevron told its shareholders one thing, and they told the local community something else," he said. "For me, it is really about the principle that all projects need to go through the [environmental impact report] process, whether one is Chevron or a homeowner making a change to their own house. Under the California Environmental Quality Act, one has to disclose what the applicant is proposing to do. That's just the law."
While activists appear to be gaining ground in Richmond, immense challenges remain. The Asian Pacific Environmental Network, in particular, faces some unique organizing obstacles due to cultural factors. "Many Laotians do not believe that they can tell the government what to do," Nompraseurt added. "In fact, the majority of the 10,000 Laotians who reside in Richmond also have a fear of corporations. They think money and power equals corruption. They sense Chevron has had so much influence on the Richmond City Council, they don't think they can change anything."
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While Richmond is a prime focus of Bay Area activists, controversies involving Chevron span the globe, from Angola, Chad, and Iraq to the Philippines. Ecuador is the hottest spot. There, Amazon Watch, a San Francisco-based organization dedicated to protecting the health and human rights of indigenous peoples in the Amazon River basin, has been embroiled with Chevron in a dispute over the oil company's liability for past operations that have had devastating consequences for indigenous peoples.
Chevron appears on the verge of being handed a judgment in Ecuador next year that could total as much as $27 billion. The ruling is a response to practices of its Texaco operations dating back to 1984, which Chevron assumed liability for during the 2001 merger.
Amazon Watch filed a lawsuit against operations then owned by Texaco in Ecuador in 1993, and first raised the issue of Chevron's potential liabilities in Ecuador when Chevron subsequently purchased the assets of Texaco. Amazon Watch maintains that pollution from oil operations in Ecuador "is one the largest environmental and social disasters on the planet," claiming that 18 billion gallons of toxic wastes have been dumped in an area the size of Rhode Island, threatening the livelihood of 30,000 indigenous peoples belonging to five different tribes. Critics claim Texaco employed primitive exploration and production practices in order to save $3.50 per barrel of oil sold to global markets. As a result, untreated wastes flowed directly into local waterways. Waste pits were simply covered over with soil, locations then re-inhabited by villagers.
Chevron points to its $40 million investment in cleanups in Ecuador as a good faith effort, but in reality, the potential for massive pollution problems in the future still exists. And while a deal with PetroEcuador, the nationalized oil company, allegedly left Chevron "off the hook" for future liability, this agreement did not, in the view of Amazon Watch lawyers, apply to the individuals still harmed by pollution.
Perhaps the biggest irony of Chevron's woes in Ecuador is that Chevron fought to move the trial from the United States to this South American country, where it has historically had a cozy relationship with the government. However, when left-leaning Rafael Correa Delgado was elected the new president of Ecuador in 2007, this strategy backfired. Chevron claims it will take this case about legacy issues it inherited from Texaco to some sort of unspecified international tribunal, but lawyers working on behalf of Amazon Watch say no such venue exists.
"It would have been a lot cheaper to settle back in 2001, when we were only asking for $1 billion to $3 billion," said Amazon Watch Executive Director Atossa Soltani. "They've lost face and an opportunity. They now look like they are out of step with today's values."
Indeed, the core message of the Amazon Watch campaign is that the handling of Ecuador represents a crisis in management. "What they did in Ecuador is indicative of deeply rooted symptoms of a company whose values are out of sync, especially here in the San Francisco Bay Area." She ridiculed the fact that Chevron points to its $40 million invested in cleanups in Ecuador as a sign of goodwill, when CEO David O'Reilly received a $50 million bonus in 2008 after the company boasted record profits of approximately $24 billion.
Juan Carlos Quiroz, a policy analyst and Ecuador specialist for the Revenue Watch Institute, expressed some sympathy for Chevron. "Chevron does make some valid points," Quiroz said, highlighting the difficulties foreign companies face when governments change hands rapidly and cultural factors beyond their control impact their image. Is it really Chevron's fault that large portions of the revenue it creates for host governments may be mismanaged, asked Quiroz.
"You have to understand that the government of Ecuador has been very unstable," he said. "The country has had ten presidents in twelve years." Consequently, Ecuador has lacked a coordinated plan for distributing revenues from oil operations. Regions that are the poorest are getting less revenue than regions that are better off, according to the Revenue Watch Institute's analysis.
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Burma, also known as Myanmar, may be Chevron's biggest black eye. Here, the issue is not so much environmental impacts, but rather the ruthless killing and looting of nearby villages by armed forces funded by Chevron. The brutal military junta ruling the country is also siphoning off revenues from oil operations and, according to Earth Rights International, stashing it in banks in Singapore.
Earth Rights International, a small nonprofit organization that started up in 1994 focused on human rights abuses in Burma, is the prime mover behind the anti-Chevron work. Despite proposed legislation in Congress that would require Chevron to pull out of Burma, that is not the group's top priority. Rather, it argues that any new projects going forward in Burma should not rely upon the military as a police force. Such battalions are used to patrol pipeline regions, fostering a variety of human rights abuses, including forced labor, land grabs, and murder. Along with contributing to The True Cost of Chevron report, Earth Rights International has released a series of reports about how revenues from oil operations there are not trickling down to provide economic benefits to local citizens.
Chevron has purported to document the benefits of programs financed by oil companies in 25 Burmese villages since 2002. These reports claim that disease rates are down, while literacy rates are up. Abuses in villages located directly in pipeline corridors have also gone down, but these reports do not acknowledge that abuses in nearby villages have gone up, the organization claims. "Chevron and its partners need to acknowledge a corporate responsibility beyond the 25 villages that exist in pipeline corridors," said Paul Donowitz, Earth Rights International's point person for its Chevron campaign. Because Burma does not pay its military and soldiers are now banned from looting and raiding villagers residing in these pipeline corridors, Donowitz claims they are just expanding their search for food and other supplies in nearby areas.
In essence, Chevron argues that if it leaves Burma, Chinese oil companies will move in to fill the void, and then local villages will be worse off than they are now, which is quite possibly true. The oil business can be dirty indeed.
Beyond the torture and mayhem, the other atrocity in Burma is that the "paradox of plenty" is in full display. Earth Rights International claims it has evidence from confidential sources that $4.8 billion has been diverted from the country's national budget from the Yadana natural gas pipeline to the military regime and is sitting in two banks in Singapore, depriving local communities of virtually any economic benefits from oil operations while enduring violent acts of social injustice.
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Kazakhstan is the largest private oil development area in the former Soviet Union. Chevron was the first private oil company to drill here in 1993 and is Kazakhstan's largest private producer. The company owns a 20 percent stake in the Karachaganack Field.
More than six years ago, the village of Berezovka, comprised of just 1,300 people and located within five kilometers of these expanding oil drilling operations, was promised to be moved to a "village of the 21st century." National and international laws require the relocation of any village that close to such oil exploration facilities.
The consortium of oil companies and government is rumored to be close to relocating Berezovka, according to Michelle Kinman with Crude Accountability, a Washington, DC-based nonprofit organization that is focused on environmental-justice issues near the Caspian Sea. "We are cautiously optimistic, since this action is predicated on national laws," Kinman said. In her view, the companies involved with consortium, including Chevron, do not want to set a precedent that raises expectations on future relocations too high.
Unfortunately, previous relocations have not been done well. The residents of one rural village, Tengiz, were all moved into a single urban high-rise building. Disputes over compensation of roughly $1,500 per household involved methods of counting what was and wasn't a "household." Crude Accountability claims that few of these villagers were given any training about how to live and work in an urban setting. The organization is working toward making the relocation of Berezovka a successful one, while simultaneously convincing the World Bank and other financial institutions to not fund oil and natural gas development that fosters pollution or human rights abuses throughout the Caspian Sea.
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Nigeria may represent Chevron's toughest challenge yet. What happens in Nigeria could have major impacts on future operations in a continent destined to become the top oil producer for the United States in the coming decades. In fact, Africa already supplies the United States with more oil than the Middle East.
Nigeria's population of 150 million people makes it the most populous country in Africa. The country is torn by cultural and religious strife. The north is predominately Muslim and has traditionally dominated governing structures. The south is comprised primarily of poor Christian populations living near the oil reserves in the Niger Delta, a former fishing community. These southerners traditionally have not had much voice in governmental affairs.
Oil operations have decimated fish populations, interrupting the traditional way of life in the Niger Delta. Many villagers write long detailed letters to Chevron about the impacts oil operations have on their lives — but they never get a response. Chevron employees live in barricades so they have no interaction with the local population. As of late, villagers have become armed and steal oil — locals call it "bunkering" — and Chevron has begun to bribe armed rebels to allow oil to get to market, further entrenching a culture of corruption in Nigeria.
"Oil is so lucrative that a web of mysterious relationships between oil companies, the government, militants, and communities has evolved," said Laura Livoti, founder of Justice in Nigeria Now, and a longtime activist and radio reporter. Without her group, the issues surrounding oil and this troubled African country would never make the news and become part of the ongoing dialogue about how to reform Chevron and other oil companies operating there. The media tends to ignore what happens in this part of the world, but Livoti's group, with a staff of two, is determined to change that.
Earlier this year, for example, 20,000 villagers were displaced during a government-backed crackdown funded by Chevron. "No humanitarian aid was allowed, no journalists, no human-rights observers. Military rogues blew up facilities, which shut down the oil industry. Things got so bad, Chevron pulled out all non-essential employees," Livoti said.
It was this development that prompted the government to offer an amnesty program for militants this past May. While many balked, a large number have come forward to accept amnesty, except the militants most committed to political ideals as well as genuine solutions to local poverty.
The militants and ongoing corruption in Nigeria complicates things. "When the Nigerians were peaceful protestors, it was a lot easier to gain sympathy," acknowledged Livoti. "Now that an armed resistance as risen up in Nigeria, attracting sympathy — and financial support — is much more difficult," she said.
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Despite the litany of woes facing Chevron around the world on the environmental and social fronts, even some renewable energy advocates come to its defense.
"Chevron is in the business of producing crude oil, which is what makes today's world economy run," said Al Rettenmaier, CEO of Integrated Energy Solutions, LLC, an Overland Park, Kansas-based firm committed to tapping the renewable energy potential of algae as well as other clean energy options. "It is a tough, competitive business and we are fortunate to have American oil companies as the leaders in this huge energy industry. We all want a different model, but the reality for today is that the world runs on oil. My personal experience with Chevron is that they are a forward-thinking, progressive American oil company. There is a great deal of concern in their company for the environment and safety. They are a company I would trust to do the right thing anywhere they operate in the world."
Chevron has turned its Chevron Energy Solutions into a $400 million-plus business developing solar photovoltaic and energy-efficiency projects, including a solar system for the Richmond Civic Center. But this level of funding is chump change compared with its total top and bottom-line numbers. The firm also failed to hire locally in Richmond when installing that system, despite the existence of the city's Solar Richmond program, which hires and trains local youth to create the green jobs President Obama has been touting as the answer to today's struggling economy.
Still, the firm is not without its green-tech supporters. "I have spent a considerable amount of time with the company and feel that while they are working in an inherently dirty business, and have a legacy of dubious environmental attention, they are committed to being an energy company well into the future," said Ian Thomson, a prime mover behind CleanTechies.com, a web site that focuses on green jobs in the Bay Area.
"The company is full of extremely bright people," Thomson added. "They know that 'cap and trade' and carbon regulations and other constraints will make alternatives increasingly competitive with their core business. But they know oil. Chevron feels they can compete with the other big oil companies by doing that what they've always been doing."
Although Chevron officials were not willing to discuss the company's checkered international record, Chevron's recently retired chief technology officer, Don Paul, was made available to discuss new energy technologies in an interview at Chevron's San Ramon headquarters, where security was as tight as at a military facility.
"Just when the world thinks it is running out of something, science and technology make something else work," Paul said, summing up the perspective of many oil industry veterans about the likely solution to the problems posed by climate change. From Paul's perspective, bio-fuels are a big part of our energy future as well as being a line of business not too dissimilar from oil and natural gas. "Crude oil is biomass that was processed through geologic time spanning million of years," he said. "With bio-fuels, we are just short-circuiting geologic time. In essence, what we are looking to do in bio-fuels is cut out that middle step."
Responding to criticisms about relying upon former food crops such as corn to serve as the prime feedstock for bio-fuels, Chevron has partnered with Weyerhaeuser to explore developing bio-fuels from timber and wood waste. "Our focus is how to develop the next generation of bio-fuel technologies and go after a large part of our current waste stream as sources for these cleaner fuels," Paul said. Noting that corn prices have risen due to the ethanol production boom in the Midwest, he expressed concern about trading off food for fuel. "Much of our corn has traditionally been given away as humanitarian contributions to poor developing nations. What happens to that program when corn is diverted to fuel?"
Given the size of its operations, he said Chevron takes a twenty-year view on emerging energy technologies. The firm has created partnerships with key agricultural schools at UC Davis, Texas A&M, and Georgia Tech. "Ultimately, we hope to tap true wastes such as sewage, trash, and waste grease to create bio-fuels," he said.
While Chevron is the largest producer of geothermal energy in the world, it does not see geothermal as a major energy source in California. Instead, Paul was much more bullish on solar energy. But instead of the solar photovoltaic arrays that have become so popular with residents and businesses alike, Chevron is instead exploring solar thermal technologies that concentrate solar energy to create steam. "We think it makes more sense to heat water with the sun to create steam instead of converting sunlight to electricity, where you lose two-thirds of the available energy in the conversion to electricity," he said. Chevron hopes to launch a large-scale, solar-thermal-concentrated power initiative in the near future, he promised.
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What if oil companies changed their ways and Chevron owned up to its responsibilities and began to devote larger and larger sums to renewable alternatives to oil and natural gas? Can these corporations be part of the solution or will they always be part of the problem?
The announcement that Chevron will soon have a new CEO, John Watson, is a sign, perhaps, that the company is seeking a new direction. "It's possible that this provides an opening for Chevron to do the right thing in the spirit of moving ahead and getting rid of old baggage," observed Becky Tarbotton, program director for the Rainforest Action Network, yet another non-governmental organization ganging up on the oil company. But Tarbotton isn't getting her hopes up. "From what we can tell, Watson isn't exactly a paragon of progressiveness," she said. "In fact, he was the architect of the merger between Texaco and Chevron. But you never know."
The involvement of the Rainforest Action Network, a pioneer in both boycotts and stakeholder engagement, signals that the anti-Chevron campaign is about to hit a new, even more intense phase. "This will be an on-line, off-line campaign of a scale and scope never seen before," Tarbotton promised. "We're bringing some firepower to the campaign in a full-scale attack on the Chevron brand. Our primary objective is to hold Chevron accountable in Ecuador. Our second goal is to get Chevron to establish a global environmental and human rights policy. We're not asking for the sky. We just want Chevron to do the basic things so they are no longer criminals."
Antonia Juhasz, the mastermind of the anti-Chevron campaign, sums up the core message of this unprecedented assault on a single oil company this way. "Chevron is one of the wealthiest corporations in the world," she said. "It should therefore be the cleanest, safest and most equitable company there is and should be deploying the safest technology. If you have to collaborate with some of the most brutal political regimes in the world to safeguard operations, you should probably not be doing business there. They should be limiting production to the least environmentally damaging methods and regions. Oil is an inherently destructive industry, but Chevron is clearly not a model of how to do it right."
Juhasz claims that every California citizen is now impacted by the political power of Chevron. "Chevron calls the shots for the business community at the state capitol in Sacramento, and it led the fight to kill a proposal to enact a severance oil tax — which most other states have — that would add $1 billion annually to state government's coffers," she said. "We don't have the funds to address health care, cleanups on our highways, and create new jobs because Chevron and its allies also fought efforts to close loopholes on corporate taxation at the federal level, too."
But for all its involvement at the state and local level, the future of Chevron's reputation may well be decided in a court in South America. The looming judgment in Ecuador will signal whether the power of the purse can prevail in today's jittery financial climate. A $27 billion hit to Chevron would certainly send a message to shareholders, as well as the rest of the oil industry. Whatever the outcome in Ecuador, the power of the people is being tested in novel ways, and the eventual outcome of the anti-Chevron campaign will likely have repercussions for years to come.
Peter Asmus is the author of Introduction to Energy in California (University of California Press, 2009). He has been covering the world of energy for more than twenty years. www.PeterAsmus.com