Monbiot on BP

Well, yes, externalities should be paid for, this is true:

A paper by the New Economics Foundation in 2006 used government estimates of the cost of carbon emissions to calculate the liabilities of Shell and BP. It found that while the two companies had just posted profits of £25bn, they had incurred costs in the same year of £46.5bn. The oil leaking into the Gulf of Mexico from the Deepwater Horizon well is scarcely more damaging, and its eventual impacts scarcely more expensive, than the oil that is captured by neighbouring rigs then processed and burnt as intended……….

There is an alternative, but it is unlikely to materialise. Just as Norway has treated its oil money not as profit but as provision against a tougher future, so the governments in whose territories oil companies work should force them to pay into a decommissioning fund. The levy should reflect the costs that economists are able to calculate, plus a contingency for those we can\’t yet foresee.

This would outrage the oil firms, as it would render many of them unprofitable. But there\’s a simple answer to that: the money currently defined as profit is nothing of the kind.

But to say that the externalities of the use of oil should be paid by the companies doing the drilling for oil isn\’t quite true. They might not be a bad place to collect them, it being fairly simple at that stage of the process. But the costs of those externalities should be bourne by those who use the oil brought up, not purely by the capitalists who are bringing it up.

And of course there are already mechanisms in place to do this. Take us in the UK, just as one example. We have fuel duty. And part of that fuel duty is to \”meet our Rio committments\” in Ken Clarke\’s phrase as he brought in the fuel duty escalator. From the Stern Review we know what the climate change externality of the use of a litre of petrol is: 11p. The fuel duty imposed by the escalator on that same litre is some 23p.

The externalities are paid for, are included in market prices. And the externalities are paid for by the right people as well: the users who are creating the externalities.

We are, in fact, already doing what is being urged.

6 thoughts on “Monbiot on BP”

  1. Brian, follower of Deornoth

    No, no, no. In all fields of state endeavour, existing levels of taxation and spending don’t count. So you see the most heavily subsidised areas of the country referred to as ‘deprived’, increases in benefits referred to as ‘cuts’, and spending announcements decried as not being ‘new money’.

    Only increases in taxation count.

  2. …..The oil leaking into the Gulf of Mexico from the Deepwater Horizon well is scarcely more damaging, and its eventual impacts scarcely more expensive, than the oil that is captured by neighbouring rigs then processed and burnt as intended…….

    This is where I want to get George and flush his head down the toilet.

    With a system of cap & trade, or carbon taxes, CO2 emissions can be controlled or reduced. So they no longer matter.

    Oil spills??

    The birds drowning in the gulf of Mexico will be thrilled to hear that George regards a little CO2 as equivalent to the thick oil coating their feathers.

    The current Gulf of Mexico problem is a complete disaster, and needs to be dealt with today. Climate change is a long term problem that can be dealt with.

  3. Well clearly they don’t know bugger all about economy…

    “Just as Norway has treated its oil money not as profit but as provision against a tougher future”

    1) Who has ever said that money made through profits cannot be used as provisions for the future?*

    2) Profit is not a use of money but a source

    3) I believe that if anything the Norwegians have used the cash flow from their oil and not the profit. Distinguishing the two does seem to be incredibly difficult even for people who have studied but accountants should really know the difference

    * (yes, I know that they can be tax exempted by calling them profit but that is accounting)

  4. There is an alternative, but it is unlikely to materialise. Just as Norway has treated its oil money not as profit but as provision against a tougher future, so the governments in whose territories oil companies work should force them to pay into a decommissioning fund.

    They already do: in the North Sea, all the decommisioning must be paid for by the orginal company who built it (to avoid a major flogging it to a minnow 5 years before the field ran dry and leaving the minnow with costs it couldn’t possibly meet). An awful lot of the work going on in Aberdeen now is related to decomissioning. Similarly, Sakhalin Energy is committed to paying for the eventual decomissioning and restoration of the sites of the Sakhalin II project, this was even being discussed when it was under construction.

    Where Monbiot got the idea that oil companies don’t pay the decomissioning costs of the stuff they built is anyone’s guess, but he’s a rubbish journalist for not finding out what actually happens.

  5. “The birds drowning in the gulf of Mexico will be thrilled to hear that George regards a little CO2 as equivalent to the thick oil coating their feathers.”

    a) Some dead oily cormorants. Some ugly beaches for a few years. Some pissed-off, but compensated, fishermen (the impact of the Gulf spill).

    b) Tens of millions of people in low-lying areas drowned or displaced (the impact of a 1 metre rise in sea level).

    If you don’t believe AGW actually exists, or that it’s going to have a significant impact on sea levels, then obviously the Gulf spill is worse. But if you do, then equally obviously, AGW is a gigantic catastrophe, whereas the spill is fairly trivial (and, although it’ll be an expensive and time-consuming process, will ultimately be cleaned up).

  6. “Tens of millions of people in low-lying areas drowned or displaced (the impact of a 1 metre rise in sea level).”

    Low lying areas are generally river deltas or coral islands. In a river delta, masses of eroded silt is carried downstream by the river until it meets the sea, where the water stops and the silt drops. The land is flat and just above sea level because it is the sea that defines where it ends up.

    Coral islands, as Charles Darwin discovered, are at sea level because corals can’t grow above the sea, and are forced to stop level with the surface.

    Do you know how fast the seas rose during meltwater pulse 1a? Why were the corals not drowned? Don’t you think it a remarkable coincidence that the post-ice age sea level rise stopped rising so precisely just below the level of so much land?

    And do you think it is at all possible that the scientists pushing global warming catastrophe don’t know this?

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