The truth about big oil and climate change

The Economist offers to tell you The truth about big oil and climate change. And on the whole, it does. This is welcome; less than a decade ago their review of Moah Chants of Doot failed to even mention GW¹ though to be fair by 2012 they'd given up such nonsense.

However, it is necessary to read what they say if you want to know the truth; just looking at the pix and reading the short words written in big letters and confirming your preconceptions is not a good way of obtaining information. There are any number of people getting this wrong; either egregiously or egregiously.

The easiest way to go wrong is to stop at their sub-title: Even as concerns about global warming grow, energy firms are planning to increase fossil-fuel production. None more than ExxonMobil. Bad oil companies! Bad Exxon! What could possibly excuse such behaviour? If you really can't think of the answer and need to be told, then you need to go back to remedial school⁴. The answer is the bleedin' obvious: Yet amid the clamour is a single, jarring truth. Demand for oil is rising and the energy industry, in America and globally, is planning multi-trillion-dollar investments to satisfy it. And It would be wrong to conclude that the energy firms must therefore be evil. They are responding to incentives set by society. The financial returns from oil are higher than those from renewables².

The Economist admits that the market cannot solve climate change by itself which I think is both true and uncontroversial. But it continues Muscular government action is needed. Contrary to the fears of many Republicans (and hopes of some Democrats), that need not involve a bloated role for the state. After a pause for a brief sideswipe at the Green New Disaster, it continues The best policy, in America and beyond, is to tax carbon emissions, which ExxonMobil backs³.

As I Twote:

Setting policy is a task for Govt. Don't blame Exxon if your govt is crap. Mostly, blame your voters.

Disclaimer

Did I mention that my parents in law used to work for Exxon? And that we have benefited financially from this. I've said this before, of course.

Notes

1. They were fairly shitty over CRUgate, too, but then so were the rest of the Meeja.

2. And perhaps in implicit rebuke to those worried about "stranded assets" it notes that the typical major derives a minority of its stockmarket value from profits it will make after 2030. Incidentally, the bit about returns-from-renewables being less is something of a red herring. FF companies know about... FFs. They have no particular advantage in renewables. Although the mindless tend to think "they produce energy. Renewables also energy. So FF companies can do renwables! It logic!" this is not logic, it is wrong. Indeed, as I've argued before - but cannot now find - I would argue that it is better for FF companies not to invest in renewables: that way you have a nice investment choice: if you want to invest in FF you can, if you want to invest in renewables you can. If substantial work in renewables were done by FF companies, the market signals would be all mixed up.

3. Technically it is true that Exxon backs a carbon tax, but their support is weak at best. They were sponsoring sane things all the way back in 2005, I find.

4. Note that you don't have to agree with the answer (though you're wrong if you don't); but you do have to be able to think of the answer; or rather, you should already know it.

Refs

* Who Gets How Much in a Carbon Tax-and-Dividend? - QS
* Cowen on the Egalitarianism of the Economics Profession - by David Henderson