ExxonMobil Is Suing Investors Who Want Faster Climate Action (npr.org) 110
An anonymous reader quotes a report from NPR: ExxonMobil faces dozens of lawsuits from states and localities alleging the company lied for decades about its role in climate change and the dangers of burning fossil fuels. But now, ExxonMobil is going on the offensive with a lawsuit targeting investors who want the company to slash pollution that's raising global temperatures. Investors in publicly-traded companies like ExxonMobil try to shape corporate policies by filing shareholder proposals that are voted on at annual meetings. ExxonMobil says it's fed up with a pair of investor groups that it claims are abusing the system by filing similar proposals year after year in an effort to micromanage its business.
ExxonMobil's lawsuit points to growing tensions between companies and activist investors calling for corporations to do more to shrink their climate impact and prepare for a hotter world. Interest groups on both sides of the case say it could unleash a wave of corporate litigation against climate activists. It is happening at a time when global temperatures continue to rise, and corporate analysts say most companies aren't on track to meet targets they set to reduce their heat-trapping emissions. "Exxon is really upping the ante here in a big way by bringing this case," says Josh Zinner, chief executive of an investor coalition called the Interfaith Center on Corporate Accountability, whose members include a defendant in the ExxonMobil case. "Other companies could use this tactic not just to block resolutions," Zinner says, "but to intimidate their shareholders from even bringing these [climate] issues to the table."
ExxonMobil said in an email that it is suing the investor groups Arjuna Capital and Follow This because the U.S. Securities and Exchange Commission (SEC) isn't enforcing rules governing when investors can resubmit shareholder proposals. A court is the "the right place to get clarity on SEC rules," ExxonMobil said, adding that the case "is not about climate change." Other corporations are watching ExxonMobil's case, says Charles Crain, a vice president at the National Association of Manufacturers, which represents ExxonMobil and other industrial companies. "If companies are decreasingly able to get the SEC to allow them to exclude proposals that are obviously politically motivated, then the next question is, well, can the courts succeed where the SEC has failed -- or, more accurately, not even tried?," Crain says. "The shareholder proposal from Arjuna and Follow This called for ExxonMobil to cut emissions faster from its own operations and from its supply chain, including the pollution that's created when customers burn its oil and natural gas," notes NPR. "That indirect pollution, known as Scope 3 emissions, accounts for 90% of ExxonMobil's carbon footprint."
"ExxonMobil says it is committed to cutting emissions from its operations. But the idea that activist investors like Arjuna and Follow This can quickly push the company out of the oil and gas business with new climate policies is 'simplistic and against the interests of the vast majority of ExxonMobil shareholders,' the company said in a court filing in Texas." The company added that while shareholders are entitled to submit proposals, they don't have "an unlimited right to put forth any proposal to do anything."
"Their intent is to advance their agenda rather than creating long-term value for shareholders," ExxonMobil said of Arjuna and Follow This.
ExxonMobil's lawsuit points to growing tensions between companies and activist investors calling for corporations to do more to shrink their climate impact and prepare for a hotter world. Interest groups on both sides of the case say it could unleash a wave of corporate litigation against climate activists. It is happening at a time when global temperatures continue to rise, and corporate analysts say most companies aren't on track to meet targets they set to reduce their heat-trapping emissions. "Exxon is really upping the ante here in a big way by bringing this case," says Josh Zinner, chief executive of an investor coalition called the Interfaith Center on Corporate Accountability, whose members include a defendant in the ExxonMobil case. "Other companies could use this tactic not just to block resolutions," Zinner says, "but to intimidate their shareholders from even bringing these [climate] issues to the table."
ExxonMobil said in an email that it is suing the investor groups Arjuna Capital and Follow This because the U.S. Securities and Exchange Commission (SEC) isn't enforcing rules governing when investors can resubmit shareholder proposals. A court is the "the right place to get clarity on SEC rules," ExxonMobil said, adding that the case "is not about climate change." Other corporations are watching ExxonMobil's case, says Charles Crain, a vice president at the National Association of Manufacturers, which represents ExxonMobil and other industrial companies. "If companies are decreasingly able to get the SEC to allow them to exclude proposals that are obviously politically motivated, then the next question is, well, can the courts succeed where the SEC has failed -- or, more accurately, not even tried?," Crain says. "The shareholder proposal from Arjuna and Follow This called for ExxonMobil to cut emissions faster from its own operations and from its supply chain, including the pollution that's created when customers burn its oil and natural gas," notes NPR. "That indirect pollution, known as Scope 3 emissions, accounts for 90% of ExxonMobil's carbon footprint."
"ExxonMobil says it is committed to cutting emissions from its operations. But the idea that activist investors like Arjuna and Follow This can quickly push the company out of the oil and gas business with new climate policies is 'simplistic and against the interests of the vast majority of ExxonMobil shareholders,' the company said in a court filing in Texas." The company added that while shareholders are entitled to submit proposals, they don't have "an unlimited right to put forth any proposal to do anything."
"Their intent is to advance their agenda rather than creating long-term value for shareholders," ExxonMobil said of Arjuna and Follow This.
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Sounds stupid (Score:5, Insightful)
If they own a piece of the company, they get to demand whatever they want. The rest of the investors can demand something else.
Let me take a moment to feel sorry for the poor executives who have to take an extra minute after every such proposal to throw it in a trash can. I know it's taking valuable time away from managing their disinformation campaigns so they can keep poisoning the planet for profit.
It is stupid (Score:2, Informative)
If they own a piece of the company, they get to demand whatever they want. The rest of the investors can demand something else.
Let me take a moment to feel sorry for the poor executives who have to take an extra minute after every such proposal to throw it in a trash can. I know it's taking valuable time away from managing their disinformation campaigns so they can keep poisoning the planet for profit.
I own Tesla stock and this comes up at every annual shareholder meeting.
There's this one guy who owns 1 (that's 1, 0-n-e) share, and every year submits a proposal to remove Elon Musk as CEO. He gets no traction from any of the other shareholders.
There's a group that always proposes reporting on DEI efforts, which gets no traction.
There's a group that proposes that Tesla reports on human rights (such as whether their Cobalt is humanely mined).
There's a group that proposes something about human capital manage
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Each of these proposals has to be read, assessed, and printed up in schedule 14A and submitted to the SEC. It's a complete waste of time. There should be some rule that states that at least 10% of srockholders need to show support for a proposal before it is even considered.
So how would 10% of the shareholders be asked whether they support it without it being read, assessed etc? If you just mean to omit submitting it to the SEC then it's hard to see what your intention is other than to avoid scrutiny over whether your 10% support rule was actually checked.
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So how would 10% of the shareholders be asked whether they support it without it being read, assessed etc?
The shareholders already receive a proxy statement by email or paper mail. It could include a list of proposals.
The shareholders could check a box next to the proposals they think should be considered. If more than 10% say "yes", then the proposal is presented at the in-person meeting.
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Anything can be made to sound stupid if you intentionally write up so.
This is no different than say signature requirements to get an candidate or issue onto a political ballot.
Right not the board has to basically do the analysis and determine all the language for issues put forward.
Ending the current proxy ballot with a listing of issues with one liner descriptions put forth by investors and simple check box to see if enough other investors want the issue considered would be trivial to do. It could be almos
Re:It is stupid (Score:5, Insightful)
Waahhh, shareholders exercising their rights.
Re:It is stupid (Score:4, Informative)
This may be the first and only time I've agreed with this user.
I swear some of the heads of leadership in corporations these days have paper thin skin. The literal fuck? Grow some goddamn it. It's only a brief moment to get through the motions. If that's difficult, holy shit, y'all in the wrong game.
Re:It is stupid (Score:5, Insightful)
It's a complete waste of time. There should be some rule that states that at least 10% of srockholders need to show support for a proposal before it is even considered
There is. It's called FIND FUCKING PRIVATE FUNDING THEN DIPSHIT!!
If you do not like the rules for being publicly traded, then DON'T FUCKING IPO!!
People like you and your cake. Fucking hell. Want the benefits of public trading, but none of the safeguards because "OH NO! Someone is DDOSing my meeting.
Yeah, they're whiny bitches. You can fucking deal with them for the brief moment it takes to go through the motions. If that's too difficult for you, fucking sell then or if you own majority take it private. Get some thicker skin damn it.
Re:It is stupid (Score:4, Interesting)
Each of these proposals has to be read, assessed, and printed up in schedule 14A and submitted to the SEC. It's a complete waste of time. There should be some rule that states that at least 10% of srockholders need to show support for a proposal before it is even considered.
And how do you judge support? Oh that's right, shareholder votes at the AGM. This isn't a US election, we don't run an election to see who should run for election.
Also you're mad if you think the proposals are in any way a burden on a publicly listed company. Exxon will spend orders of magnitude more fighting this one legal battle than they have filing *all* of the share holder proposals they have received.
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That's how publicly traded companies have always worked. That's nothing new.
Were you trying to make a point or were you just letting off steam?
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A judge just ruled that a class action suit involving nearly 600 employees claiming that there was some fairly extreme and overt racism at a Tesla factory can go ahead. So perhaps some of the shareholders had a point - by not reporting on DEI, it seems that the Tesla board has been turning a blind eye to something that could cost the company a lot of money.
Re:It is stupid (Score:5, Insightful)
All of these are basically noise, or sand in the gears of a working company.
No, this is the way it works. If you want money from the public stock market you have to deal with the public stock market and that means dealing with the rights of shareholders.
The rules have been written slowly, over a very long time to combat centuries of malfeasance. Don't like the rules? Go private. Want money but no rules? Find a country with more lax regulation. Want lax regulation and money in a good country? Fucking deal with it, snowflake
To be fair, the ruling stated that Musk's compensation was not impartially decided
Right, so the 10 share owning travesty of sand in the gears of the company was actually 100% right.
Re: It is stupid (Score:2)
Re: It is stupid (Score:1)
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"It's effectively a DOS attack on the governance process."
It is objectively *ineffective* as a DOS attack on the governance process, since the governance process always proceeds apace.
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The article is about ExxonMobil, but your entire response is simping for Musk.
You should take a good long think about why you did that and re-consider some of your life choices.
Silly Exxon (Score:1)
When make yourself a publicly-tradable company you are now making yourself owned by the public.
Be prepared to do what your master wishes, or buy all your shares back and take all the risk yourselves.
Some real geniuses leading Exxon. (Score:3)
Re:Some real geniuses leading Exxon. (Score:5, Insightful)
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Will probably hit 10 billion in a century and with less global poverty than today. Spare us the histrionics.
You are completely wrong.
Civilization will almost certainly be set back to the dark ages or worse by within a few decades by a global nuclear war, which will be caused by social upheavals brought on by climate change, resource depletion and environmental degradation.
FFS, we can barely avoid such a war right now with all the dick-waving dictators proliferating around the world. Just what do you think is going to happen once the stress levels get cranked up by an order of magnitude?
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Ignorance is bliss.
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Re:Some real geniuses leading Exxon. (Score:4, Insightful)
The scientific community will be very relieved to hear this prophecy.
Since you're clearly in direct communication with God, I think you personally should travel to cities about to be blitzkrieged by hyper-violent weather and spread the Good News that This Is Not Happening. When the laws of physics fail your ideological tests, just deny them until they surrender. Works every time!
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We can clean things up without demanding everyone become a Chicken Little.
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If you think I'm a pessimist, you're not listening. Civilization will flourish because we end fossil fuels, but there is a clear and sickening will toward destruction and societal chaos in that industry, and that just makes the matter more urgent. They are not merely corrupt idiots chasing pocket change by selling the floorbo
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I think we should and will move away from fossil fuels, but I also know that the dire alarmism is counterproductive and insulting. "Wolf!" has been cried too many times. If your best argument isn't an argument at al
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I'll give you a hint - most of them said the world would have ended by now.
You are an idiot.
No study made stupid predictions like that.
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Civilization will flourish because we end fossil fuels
You go first, eliminate fossil fuels from your life. We'll watch. Hope you are good at hunting and gathering.
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I'm getting to carbon neutral
No, you are not. You may be imagining you are. Unless you have no plastics in your life, and grow/raise your own food, don't use the road system, and buy nothing from far away that comes by plane or ship, or possibly even rail depending on where you live, there is still plenty of fossil fuels sustaining your lifestyle. The PC or phone you are posting from is not carbon neutral, nor is the internet, and you probably still have tires on your EV or bike or bus.
And no, buying indulgences in the form of ca
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You're an idiot who doesn't listen when people try to help you. Please don't spawn.
With your help who needs enemies?
Government is a much bigger threat to my living than climate, but by all means you do you.
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Humans have actually had weather since the beginning. We will continue to have weather. Life will go on.
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Great comment. This gets to the fundamental difference in how the US and Europe see capitalism.
In Europe, the market ultimately should serve the citizens by making their lives better.
In the US, the market should reward individuals who "work hard".
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In the US, the market should reward individuals who "work hard".
It does. And how do you know it's rewarded those who worked hard? Well, they're the rich ones of course.
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More likely they are the descendants of the ones who worked hard. Unless by hard work, you mean lobbying to decrease any type of tax that could impact their dynasty inheritance.
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More likely they are the descendants of the ones who worked hard.
For the record, I was being sarcastic.
It's the kind of circular argument which is implicitly put forth based on Calvinism, which is essentially that the people on top must be blessed by god in order to have got to the top so of course the right people on top because they're blessed by god.
It's of course unmitigated bullshit.
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I suspected at first, but it vanished on a second read.
On a related topic, there are some who argue meritocracy is bad. It makes those who are rich think they earned it and overvalue it as proof of their greatness.
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It doesn't matter how important you feel a political issue is, it is still a political issue, and you are doing nothing other than stating an opinion on it.
You are also using "literally" to mean "figuratively", which is absolutely disgusting.
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The objection being raised by Exxon's defenders is that "politics" doesn't belong in business decisions. Your definition would make their argument meaningless without actually addressing anything. My point is that it's not even rational, let alone constructive, to pursue profit at the expense of its own utilitarian purposes, and that this is inherently, objectively true - not an opinion or ideology
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If you're talking about rules or resource allocation, then you are talking about politics. By definition.
Ahhh... no.
Politics is ideology. We take actions based on our ideology -but the action and the ideology are still separate.
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You have no idea what you are talking about. A market economy if what (sometimes) happens in reasonably free societies with property rights, freedom of contract and rule of law. Under such circumstances people tend to voluntarily enter contracts they find advantageous for themselves. There is no higher purpose at all in this. The only part of this whole equation that has an intrinsic value is the freedom/free society part.
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Re: Some real geniuses leading Exxon. (Score:3)
âoeMany people are willing to pay a small amount for the benefit of not destroying the planet, see how nutty people are!â
Money, and corporate growth are not the only markers of success. These people are internalising the companyâ(TM)s externalities.
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These companies are providing a product the vast majority of the world relies on for their civilized lifestyle. These kill all fossil fuels people are shallow thinkers. I'd like to have the power to remove fossil fuels from their lives just to give them a sudden clue in as to how completely fucked they would be, but I won't be following, thanks.
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Many activist investors are fine if the company dies for a noble cause, like kamikazes. Indeed some even thought they bought tickets specifically to kill it. That is how nutty some people are nowadays. Shooting them down first is not irrational for the people who invest for the market's intended purpose and not politics.
It's not the company's job to shoot down activist investors. It's the investor's job. This is literally what voting at an AGM is for. If I were an investor in Exxon I would be pissed they are wasting time and money stomping on a shareholder process out of fear that some other shareholders may agree with them. And if the shareholders agree with them, well how can you claim you're working in the interest of the shareholders.
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So, the company is acting in the interests of the other shareholders when it tells two to quit wasting everyone's time and money by demanding the company shut down.
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And if the shareholders agree with them, well how can you claim you're working in the interest of the shareholders.
If a majority of your family decides to burn your house down will you just consider that democracy in action? If your family members are suicidal hopefully you can get them help. If you investors are suicidal what are your options?
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Bad investors already go into businesses and insist on stupid changes that harm or destroy the business long term. Short term stock gains over not making the business suck more and more over time...
I see nothing wrong with investors harming the bottom line by doing things to make it less evil (which is often the most profitable path.) Oh, and Exon dying is less evi; not that it needs to come to that, but it's not a shame if they died..
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From the Streisand School of Investor Relations (Score:4, Funny)
"These people are just after publicity; I know what'll put a stop to that - let's sue them!"
Re:About fucking time (Score:5, Insightful)
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Activist investors can do nothing more than raise proposals for vote by all other investors. Why do you hate democracy so much? What kind of an authoritarian arsehat prevents people from exercising their right to vote?
long-term value for shareholders (Score:5, Insightful)
I believe avoiding global humanitarian crises, drought [that] could lead to inadequate water supplies and adverse impacts on agricultural production, flooding [that] could damage critical infrastructure and displace populations. [congress.gov] Any of these could result in economic decline due to mass migration, political crises, or conflict. Which clearly has a negative impact on the long-term growth of many multinational corporations.
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You aren't going to see many businesses close up on the basis of a theoretical future outcome.
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If I was an investor in a buggy whip company, at some point I'd argue that our capital should be invested in another direction.
Pretty much every company makes decisions based on a theoretical future outcome. Investors harp on the phrase "past performance is no guarantee of future results", and there is a kernel of truth there. You can't keep doing what you're doing merely because you have been successful in the past. You have to look forward and try your best to predict how the future might be different and
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Putting in an actual effort to, say, rebrand as an energy company rather than an oil company would absolutely be in the long term interests of the company and its shareholders. Being in oil business right now is roughly as forward-looking as being in whale blubber business in 1850 or buggy whips in 1900. It's not "theoretical" that we need to wean off fossil fuels as much as possible, as soon as possible.
Mistatement by ExxonMobil (Score:2, Interesting)
Strictly speaking, the SEC isn't issuing the "no action" letters that ExxonMobil wants them to, that ExxonMobil would then view as a safe haven to exclude the proposals. It is by no means the same thing as "not enforcing."
I'm not sure why ExxonMobil should be treated any differently than anyone else with a potential legal disagreement: solicit a qualified legal opini
I'll Let Tom Toro's Cartoon Do The Talking (Score:5, Insightful)
"Abusing the system" (Score:2)
Last I checked the idea behind a public traded company is that whoever holds the most shares makes the rules? How is it abusing a system if you are doing exactly what the system provides?
Okay ... (Score:1)
The nerve! (Score:5, Funny)
"ExxonMobil says it's fed up with a pair of investor groups that it claims are abusing the system by filing similar proposals year after year in an effort to micromanage its business."
You'd think they own the place!
So? (Score:2)
Their intent is to advance their agenda rather than creating long-term value for shareholders
So?
The company may have an obligation to try to create value for shareholders, at least under the perverse regime of due diligence you have over there,
but other investors do not.
Deal.
Someone else's footprint is also Exxon's? (Score:2)
Or can we just pull heads from asses and accept that the notion of a "scope 3 footprint" is stupid?
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Is it Exxon's cost? Mine? Our entire society, since it is part of the foundation of the economy and thus something upon which we are all dependent regardless of environmental pretense? How does hurting me by not selling me the gas I need to get to work equate to Exxon paying for an external cost? Is it not preventing me from generating a cost, necessarily implying that the c
News for nerds??? (Score:1)
Is this really news for nerds??
Re:Cheap reliable oil bad. (Score:5, Insightful)
Read up on the term "external cost" [wikipedia.org], then actually think about the implications for more than 750ms.
You should then realize that oil is not, and never has been, cheap, but rather has been monstrously costly, and all those costs are coming due.
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Re:Cheap reliable oil bad. (Score:5, Insightful)
ExxonMobile published those environmental goals to try to convince the gullible/stupid/uninformed that they were trying to meet energy goals, thus they aren't 'bad', when in fact they aren't doing anything of the sort.
In addition, ExxonMobile buys politicians to do its bidding whenever necessary, so them complaining that some small subset of their investor population is doing something for political reasons is, simply put, BS, even if true. It is like the Germans in WWI using chemical weapons then complaining that the US using shotguns was against the rules because shotguns are more damaging to their soldiers than simple rifles.
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Companies change constantly. All the big companies diversity into areas they have no competence in (ie, Microsoft). It happens all the time. A large company that focuses on one product is the rarity.
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It doesn't matter. ExxonMobile is in the business of selling oil. Most shareholders are in it to make money, not, right or wrong, to feel fru fruy about some political cause. They're asking a company that sells a product to sell less of that product, which runs counter to the mission of the company. It's the same as asking Elon Musk to sell fewer cars. If you don't want a company to sell a product, come up with a better product that customers want instead of that product. The fact is oil isn't going anywhere and it can't. Look around your house. Hell, look at the computer or cell phone you're typing on. Everything we do requires oil and we do things today that our distant ancestors could never have come up with.
If you're a shareholder, you get the same voice as the other shareholders. If you vote that the company should give all its profits to a cats' home, and the majority of shareholders agree with you, well, that's what the company should do.
Re: Cheap reliable oil bad. (Score:2)
Re: Cheap reliable oil bad. (Score:5, Informative)
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