Climate Gaslighting - September 18, 2022

Say it ain’t so, Joe!

The fossil fuels industry has been making record profits of four times their usual rate since concerns about supply that has driven the price of oil up past $80 per barrel and natural gas through the roof. Because of these high prices, people everywhere are paying more for their gas, diesel, fuel oil, heating oil, and even their electricity. Even those who receive their electricity from a sustainable source off the grid find their rates have risen as utilities are enticed to sell even cheap electricity to higher bidders. 

Most of the oil fields owned by the major oil companies operate at prices of about $20 per barrel. The price they can now sell their oil is 75% pure profits. Some countries, notably the United Kingdom, have even imposed a windfall profits tax of about 25% on these excess profits that oil companies are fortunate to receive, but for nothing they have actually done, except fail to keep up with demand so prices remain lower. 

To add insult to this injury, it has just come to light that the oil companies have been lying about emissions. Memos and emails just discovered and released show discussions between executives and lobbyists that counter the public claims oil companies have been releasing. 

For instance, Exxon claimed that they were committed to the Paris Climate Accord, Yet, documents show that Exxon was trying to undermine their commitments. As an example, Exxon has been claiming they have earnestly been working for decades to develop algae from which they can extract biofuels. Despite their public optimism, they have been noting behind the scenes that they are decades away from producing such biofuels. 

Oil company scientists have been warning their executives for decades about the perils of global warming, but it appears that the industry prefers to not make a full-throated transition to sustainability until economically viable oil remains in the ground. 

Such a concern about stranded resources should not be a factor if we are truly concerned about better and more benign technologies. Every better technology replaces an older one, which makes these previous investments irrelevant at that point. Should a concern about the buggy whip industry prevent us from developing the motor car, or concern about fossil fuel assets left in the ground prevent us from transitioning to electric cars, solar power, and wind generation?

Economics is about efficiency. By keeping that focus, we can ensure that we can enjoy a standard of living without unnecessarily exhausting our natural resources. By producing without also depleting fixed resources, we most efficiently use the economic pie for all, future generations included. 

However, some have greater concerns about keeping a bigger piece of the economic pie rather than preserving and enhancing it. This is the position of oil companies far more concerned about their positions than the good of us all. 

More than fifty years ago, the Nobel prize-winning conservative economist Milton Friedman argued that the sole goal of a corporation ought to be to make a profit. He then went on to argue that human concerns such as survival of the planet can be advocated by a corporation’s shareholders with the dividends and capital gains they earn. 

Yet, society offers the corporation an important social position. They are considered a legal person, with the rights and responsibilities that go along with it. If we are to include a mutual respect for future generations, then Friedman’s doctrine needs to be appealed. Friedman would not argue for corporate irresponsibility or opaqueness had he recognized that firms fail to internalize externalities we mortals understand. When we make decisions that subvert sustainability, we do so by placing ourselves in a greater position than future generations. 

This intergenerational negative externality is something for which we all deserve an honest and difficult conversation. Disingenuous gaslighting by individuals or corporations only frustrates the dialog and makes cynics of us all. 

Economists believe in full and complete information, and in prices that reflect all costs, including the costs on future generations of our decisions today. We can do it, but lobbying and short-sighted politicians supported by lobbyists’ largesse only hinders these discussion. 

I guess when there is so much profit to go around, though, sincere conversations become much harder.