Business and consumers are addicted to oil and, as a result, the industry controls much of the world's power, wealth and environmental destiny. The ChevronTexaco Corp. merger, if approved, will create the fourth-largest player in this pantheon of corporate influence.

Texaco sprang -- almost literally -- from an oil gusher in Texas more than a hundred years ago. Chevron, the Pacific Coast branch of Standard Oil, gained prominence in the 1930s with the discovery of oil beneath the sands in Saudi Arabia.

Both Texaco and Chevron have amassed great wealth and carved out infamous reputations during the past century. Shareholders are obviously excited about the wealth. They should be wary of the reputations.

The merged ChevronTexaco will be the largest company in California, controlling 40 percent of the oil-refining business in California and generating $80 billion in annual revenues. The merged company will save $1 billion in its combined operating expenses. These are the numbers The Company and The Street use to define the merger. These numbers, however, only tell part of the tale.

There is a social-investing technique called ``best of class.'' It measures a company's social performance against its peers, not against external benchmarks, such as the environmental impacts of its product, environmental reporting and transparency of its operations. BritishPetroleum, although guilty of being an oil company, is thought by many to represent the ``best of class'' in the energy industry. BP is known for its enlightened position on global warming and its interest in developing alternative energy.

Chevron and Texaco, on the other hand, are known primarily for their transgressions on a wide range of social issues. The two companies, for example, have been forced to settle high-profile lawsuits involving gender and racial discrimination, environmental racism and worker safety issues. And, as you would expect with two major oil refiners, their environmental violations have been innumerable.

In fact, investors in the new Chevron Texaco will likely be buying one of the biggest polluters in California history and one of the worst in the world, in terms of spills, leaks and the release of toxic emissions into the air.

The record of these two companies is even worse in the developing world. Both companies' operations overseas have been surrounded by allegations of corruption, exploitation, environmental catastrophe and human rights abuses. True, these abuses are endemic to the oil business in the developing world. Nonetheless, Chevron and Texaco have been implicated from Russia to West Africa to China.

Apologists dismiss the spills, explosions, toxic leaks and human rights abuses as part of the business. But over time, the scope and repetition of the accusations, violations, admissions of guilt and legal settlements define the corporate modus operandi of a company. More often than not, this pattern affects the performance of the stock as well.

Chevron and Texaco's record and stock prices speak for themselves. Over the past three years, the prices of Chevron's and Texaco's stock have lagged far behind BP and the energy sector as a whole on both a price-only and reinvested basis. The stakes are high with a merger of oil titans because the conduct of big oil companies wreaks havoc on everyone, not just shareholders.

ChevronTexaco will have more political power as a merged company. Environmental protection will not on be on its agenda. ChevronTexaco will have more power in the marketplace. Competition at the pump will not be on its agenda. ChevronTexaco will have more influence in the developing world. Sustainable growth and supporting democratic societies will not be on its agenda. This merger represents a new chapter for these two companies. Investors should hope it's not from the same old story.

Blaine Townsend is the regional manager of Trillium Asset Management Corp., an independent advisory firm that specializes in socially responsible investment.

©2000 San Francisco Chronicle

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