After two years of trading gasoline in New York Harbor, I was transferred into international products trading and assigned to the Pacific region. My primary responsibility was to export refined products (gasoline, gas oil, fuel oil, and heavy ends) out of Shell’s west coast refineries and import feedstocks. After two months in the job, I flew to Singapore to meet with Asian trading companies. I had never been to Asia and then suddenly, I was dealing with Koreans, Chinese, Singaporeans, Japanese and other Asian nationalities.
Before the early 2000s, Shell was separated into local offices with powerful country chairs. Each country operated autonomously and employed local Shell traders. For example, I worked and traded for Shell USA which traded independently from other Shell countries. Shell created Shell International Trading Company (SITCO), based in London, and Shell Eastern International Trading Company (SIETCO), based in Singapore, and tried to voluntarily consolidate the local Shell trading companies into a worldwide trading system. When I visited the various Asian countries, I always visited the local Shell offices to let the local Shell traders know what I was doing and seek trading opportunities with the local Shell countries. As dysfunctional as the Shell trading organization was at that time, I knew that Shell would benefit more from optimizing worldwide than their individual countries.
Shell’s west coast refineries needed to export gas oil (diesel) occasionally and Asian was normally short, especially during the winter heating season. PTT, Thailand’s national energy company, regularly conducted competitive gas oil purchase tenders and I wanted to participate. SIETCO, for a small commission, offered to facilitate the PTT tender using a Shell Thailand’s local expert. I knew the value of using a local representative and agreed. I won the tender and Shell’s west coast refinery exported a gas oil cargo to Thailand. Upon arrival, I learned that the cargo’s gas oil specifications were outside the contractual agreement, and PTT would not accept delivery without a financial penalty.
I sold the cargo to SIETCO based on loading specifications which were within specifications, but SIETCO said that PTT was corrupt and just wanted a financial payment. Legally, it was SIETCO’s problem as my contract was with SIETCO — not PTT, but I agreed to pay the financial damages since SIETCO’s commission was low compared to the financial damages PTT demanded.
About twenty years later at a Shell Trading reunion party, I sat next to a SIETCO trading operator whom I knew from my early Singapore visits. She was drinking heavily and started laughing about the PTT tender that had the specification problem. She told me that SIETCO had deliberatively sold my cargo to PTT using delivered, not loading, specifications. My deal with SIETCO was not back-to-back as I was informed by the SIETCO traders. SIETCO assumed the specification risks but when facing a large financial penalty, lied to me about their mistake since they were personally rewarded for their trading results. The PTT financial penalties should have been paid by SIETCO.
I had tried to do what was best for Shell’s worldwide community and my actions were thwarted by dishonest Shell individuals. In Chapter 2, titled The Individual and the Community, of Dr. Reinhold Niebuhr’s 1944 publication, The Children of Light and The Children of Darkness: A Vindication of Democracy and a Critique of its Traditional Defense (The University of Chicago Press, Chicago, IL, 2011), Niebuhr stated that “bourgeois democracy, as we now have it, was established primarily to give the individual freedom from the traditional cultural, social and political restraints of the feudal-medieval world. … They did not fear the peril of anarchy which might arise from individual ambitions … and thought that there were adequate checks upon inordinate ambition in either one or the other … that men were essentially tame, cool and calculating and that individual egotism did not rise beyond the limits of nature’s impulse of self-preservation.” (pages 42–43) Obviously, the US founding fathers never met my SIETCO counterpart!
The democratic idealists of the eighteenth century first error was being too pessimistic and assigned governments the role of maintaining order through repression. Their second error was being too naïve. “It [idealists] identifies the national community with the universal and fails to recognize that the nation is also an egocentric force in history.” (page 45) The Shell Managing Directors tried to illuminate to the regional Shell companies the benefits of voluntarily working together to optimize worldwide Shell. It never worked due to local self-interest, unless a regional country was financially unprofitable. It took dismissing Shell Country Chairs and linking their personal bonuses to worldwide profits before the local offices started working as a universal community.
“Human vitalities express themselves from both individual and collective centers in many directions, and both are capable of unpredictable creative and destructive consequences.” (page 47). There is a balance between individual freedoms and community responsibilities. My knowledge of the US west coast markets linked in community with the local Shell Thai expert created effective trading. However, there was no system in place at that time to check individual self-interest. Today, there is a Shell worldwide gas oil trading profit center. There is no need for regional commission trading since the risks and rewards are shared around the world based on optimizing the worldwide community. Individuals are rewarded for their collaborative contributions to the worldwide gas oil trading profits, not self-centered trading.
“There is therefore a constant tension between individual conscience and the moral ambiguities of communities. … This tension persuades some mystics to flee to the quiet and purity of the inner world; and it prompts some utopians to seek the complete elimination of all moral ambiguities from historic existence. The one alternative is false and the other impossible.” (page 83)
I will next discuss Chapter 3, titled The Community and Property.
