The truth about big oil and climate change

20190209_LDD001_0 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.


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.


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.


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


Anonymous said...

Yet amid the clamour is a single, jarring truth. Demand for slave labour is rising and the slave labour industry, globally, is planning multi-trillion-dollar investments to satisfy it. And It would be wrong to conclude that the slave labour firms must therefore be evil. They are responding to incentives set by society. The financial returns from slave labour are higher than those from paying for labour

Tom said...

Before we hale after the oil 'majors' perhaps we should decide how to deal with state-owned oil companies. If I remember the Economist article correctly, the 'majors' control something like 17% of the oil. State-owned companies own the rest. Who cares about Exxon-Mobile? They're small fish.

Everett F Sargent said...

I really don't know what to say, so I'll break out in song ...

So long sad times
Go long bad times
We are rid of you at last
Howdy gay times
Cloudy gray times
You are now a thing of the past
Happy days are here again
The skies above are clear again
So let's sing a song of cheer again
Happy days are here again
Altogether shout it now
There's no one
Who can doubt it now
So let's tell the world about it now
Happy days are here again
Your cares and troubles are gone
There'll be no more from now on
From now on
Happy days are here again
The skies above are clear again
So, let's sing a song of cheer again
Happy times
Happy nights
Happy days
Are here again!

William M. Connolley said...

> Demand for slave labour is rising

I'm not at all sure it is (you'd have been better off with illegal drugs as an example, I think); but the bit you're missing is that slavery is illegal (and so are illegal drugs). This is important. You can't complain about people satisfying *legal* demands (well, you can complain if you like; if you happen to think using oil should be illegal you can even campaign for it).

> state-owned oil companies

True, but they're in the non-West, so the West doesn't much think about them. Of course the way to deal with them is the same as for the Majors: a carbon tax.

David B. Benson said...

Pemex. So Mexico isn't in the West?

Everett F Sargent said...

Well Fuck you all and your tax! (a very short poem)

The paradox of the carbon tax
Is that everyone says they want this tax
Yet nowhere does one find such a tax
That is because it is just another tax

One should get a refund
For not burning carbon credits
It pays to save do not you know
So print us more of those paper credits

William M. Connolley said...

> So Mexico isn't in the West?

Indeed, it is not.

CapitalistImperialistPig said...

It seems that people, or at any rate Americans, really hate carbon taxes.

Churchill said that Americans can be counted on to do the right thing, after they tried everything else. So let us get on with it, OK?


Pemex. So Mexico isn't in the West?

No, it's in the South, so instead of refunding carbon taxes Trump might apply them to building a wall of biochar bricks mortared with coal ash along the border.


David B. Benson said...


And then Bulgaria is?

William M. Connolley said...

> Bulgaria

Ex-Soviet block desperately trying to be West but most noted for being in the Wombles.

J C Brookes said...

Doesn't Norway have a big stake in some oil? They seem pretty west.

William M. Connolley said...

Norway had Statoil (for which my brother-in-law worked for a while, and maybe still does, but in Holland and places South, doing gas) and now seems to have Equinor (urgh: "The name Equinor was adopted in 2018 and it is formed by combining “equi,” the starting point for words like equal, equality and equilibrium, and “nor,” signalling that the company is of Norwegian origin"). And we have "As of 2017, the Government of Norway is the largest shareholder with 67% of the shares, while the rest is public stock....".

So yes, it is state-owned but also a public company.


George Bernard Shaw pointed out that some ancient Bulgarian families could trace their origins back for thirty, and even forty years, but that was before the great leap Womblard.

David B. Benson said...

Aha! And Orsted, the Danish wind turbine maker, is half state owned. So both countries are at most half-west.

Come to think of it TVA is half public and BPA is all public. And then there is EdF in France...

For if owning oil producers is un-West, so should owning electric power producers.

The rules in Wonderland seem simplier...


Orsted may be half Dane owned, but its SCR's still come from Thormod Ohm, who is safely across the border in Schleswig, which is as West German as it gets.

crandles said...

Renewable cost declines continue:

The latest analysis by research company BloombergNEF (BNEF) shows that the benchmark levelized cost of electricity,[1] or LCOE, for lithium-ion batteries has fallen 35% to $187 per megawatt-hour since the first half of 2018. Meanwhile, the benchmark LCOE for offshore wind has tumbled by 24%