Exxon Mobil Political Environment

Exxon Mobil has the United States as its home country, although the company operates globally. The U.S. remains an important source of fuel, and perhaps the company's biggest retail market. The legal and political environment is very favorable in the United States for Exxon Mobil. In general, oil companies receive a tremendous array of subsidies, often granted by politicians who have received large contributions from fossil fuel companies (Carrington & Davies, 2015).

Exxon Mobil is tremendously profitable, but receives tax benefits and other help from government when it invests money in an area, perhaps for creating jobs. It is difficult to describe the political environment as anything other than favorable when you are among the wealthiest companies in the world and you still receive billions in tax breaks, in exchange for donating to political campaigns. The legal environment is perhaps a little bit less favorable.

While the same politicians write laws -- or more accurately they pass laws -- and those laws tend to be favorable for oil companies, Exxon Mobil also is governed by a number of laws, in particular regarding its environmental obligations. The company will occasionally find these onerous, though clearly such regulations are not preventing Exxon Mobil from being profitable, as it earned $150 billion in profits in the past four years.

Even with the environmental regulations, Exxon has never been compelled to pay the actual cost of the damage its products have done to the environment -- it is a luxury to have passive governments allow a company to offload negative externalities on the general public, and this luxury is reflected in Exxon Mobil's tremendous profits. This is not to say that there are no barriers for Exxon Mobil, just that the company is expert at removing these barriers.

The company forges good relationships with politicians at all levels, in order to ensure the most favorable legislation and tax policy. Exxon Mobil uses lobbyists extensively as a strategy to remove political and regulatory barriers, and they do it well, as there are seldom major barriers that cannot be overcome. There are instances where barriers to things like exploration take longer to remove, but they are usually removed given enough time.

The importance of oil products to the world's economy creates substantial motivation on the part of politicians and legislators around the world and in the U.S. in particular to ensure that there are only minimal barriers for companies like Exxon Mobil to overcome. The situation in terms of political/legal environment otherwise varies by country, but in most countries would be considered to be favorable.

There are, however, some key nations either on the production side or the retail side, where Exxon Mobil does face significant limitations on its operations. For example, it is all but shut out of the Chinese market, which has government-run monopolies. Exxon Mobil is effectively limited in many other countries with similar market conditions as well, and may not have access to exploration in some countries, either. Thus, Exxon needs to make its money only in those countries where oil companies are allowed to compete relatively freely.

In addition, there are many forces seeking to increase regulation and taxation on the oil industry. This may create limitations on Exxon Mobil in the future. Such limitations may make it difficult for.