# Big Oil are not Climate Change Denialists **URL:** \ **Category:** Great Debates\ **Created:** [July 3, 2014, 9:32pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303 "2014-07-03T21:32:35Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [July 4, 2014, 7:47pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/81 "2014-07-04T19:47:57Z")
> [@wolfpup](#): > > Utter bullshit. Sometimes the difference between long term success and failure is having the foresight to recognize the larger true business that a company is really in – for example, an oil company might conclude that it’s really in the **energy** business. These companies couldn’t even transition to the coal business. Shoot, the majors have struggled mightily in trying to transition to the shale business. That’s dominated by the independents. They are in the oil and gas business. They make good money in that. There is absolutely nothing similar about exploring for and producing oil and gas and solar panels or hydroelectric or whatever else you think they should be in. Focused companies are the best performing. > [@wolfpup](#): > > Experience in what? This isn’t a discussion about how to get oil out of the ground, it’s a discussion about the public relations industry. See my previous post. Well, for example, I think my expertise helps quite a bit in responses about people not understanding marketing contracts or commodity pricing. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [July 4, 2014, 7:49pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/82 "2014-07-04T19:49:54Z")
> [@tomndebb](#): > > What support? A one or two-line tepid remark on a website that is only read by the few people who are looking for it? > Let them take out full page ads encouraging the public to reduce consumption. Let them stop financing political campaigns of candidates who have openly claimed that we don’t know why climate change is occurring. Is it really so hard to say that an action by BO is good? Do you expect every company to take out a full page ad? I understand that BO may be attempting to pull strings behind the scenes. Even so, any public support, however tepid, helps in the public perception of AGW. Certainly it would help if BO would obstruct even less but I’ll at least take the good where I can get it. I’d like to hear a response from some of the more notorious AGW skeptics on why BO is publicly admitting to AGW. If the companies with the most to lose are on board whence is the skepticism? ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [July 4, 2014, 7:50pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/83 "2014-07-04T19:50:01Z")
> [@Martin\_Hyde](#): > > And that’s just your opinion on their position–it doesn’t at all contradict that their official statements show their position on climate change. Actually you ignored that I said early that this only shows a tacit support of the companies for the ones in the industry that are funding denial. And this shows also your lack of logic, **the point is that I’m not contradicting what they said** , I’m saying here that those companies are being incompetent by having rogue CEOs and Members that are undermining their official position. That, or that they are just lying to all regarding what are their real intensions are. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [July 4, 2014, 7:52pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/84 "2014-07-04T19:52:52Z")
> [@GIGObuster](#): > > Good think that the IPCC and virtually all proponents of change never ever said that we should stop cold turkey. Nor did I say they did. I said that this massive difference makes the oil industry and tobacco industry not at all analogous in their responses to public concerns. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [July 4, 2014, 8:00pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/85 "2014-07-04T20:00:13Z")
> [@LonghornDave](#): > > These companies couldn’t even transition to the coal business. Shoot, the majors have struggled mightily in trying to transition to the shale business. That’s dominated by the independents. They are in the oil and gas business. They make good money in that. There is absolutely nothing similar about exploring for and producing oil and gas and solar panels or hydroelectric or whatever else you think they should be in. Focused companies are the best performing. Somehow I think the buggy whip manufacturers in heaven are smiling at that simple idea. > [@LonghornDave](#): > > Well, for example, I think my expertise helps quite a bit in responses about people not understanding marketing contracts or commodity pricing. Well I do think that someone like Nordhaus, that was just appointed President of the American Economic Association to have a better idea on what we should be doing. > **[William Nordhaus: Smoking can teach us about climate change](https://www.salon.com/2013/10/30/william_nordhaus_smoking_can_teach_us_about_climate_change/)** > > A Yale economist explains why we need to put a price on carbon > [@](#): > > _In the book, you make the argument that either a carbon tax or cap and trade are the only ways to get that insurance into play. Can you explain why you see those as the only real solution for reducing carbon emissions?_ > > The big message I want to get across is that the only way that we know — as economists and as social scientists — to slow it, is what I call “raising the price of carbon.” And more specifically, raising the price of actions that have emissions of carbon dioxide and other greenhouse gases. > > The idea is really simple: It’s that people respond to prices, and when prices are high, people use less of things. When the price of gasoline goes up, people use less gasoline; when the price of bread goes up, people have less bread. The idea here is exactly the same: If the price of emissions goes up, then people are going to emit less. And this is not just consumers. If there’s one thing I wanted to get across it’s that. It’s a very simple point, but it’s very elusive and, I think, strange for people, the idea that you do that. > > The second point as to why that’s really the way to approach the problem is because it’s so pervasive. It gets in the cracks, it gets everywhere: It operates on consumers, it operates on producers, it operates on inventors, it operates on people who do research and development. Whereas other things we might do, like regulations for subsidies, just affect little parts of the problem. Either one of these — a cap and trade or a carbon tax – will do it, and as far as I know those are the only ways to do it. Somebody may come up with another way, but I’ve never seen it in all the years I’ve been looking at it. > > \*What would you say the main challenges are to getting something like that applied universally? > \* > Well, there are a lot of them, but I guess I’d focus on two particular ones. The first is just getting people used to the idea that if you want to do something to slow climate change, you have to raise the price of carbon. It’s kind of a strange notion to most people, but you have to keep explaining it and make people comfortable with it. I mean, there are lots of things we do that are strange: Who would think it’s a good idea to have somebody stick a needle in your arm? But every year I get my flu shot, and I’m really convinced it’s a good idea. > > That takes a lot of work, and it’s different in different countries. The U.S. has this weird, anti-tax ideology, but not every country does. So we’ve got to get over the hurdle how to do it, and then we’ve got to work with each individual country, and get everyone to work together to take actions to raise the price and do other things to slow emissions. > > _To that first point, what do you say to people who just wouldn’t be able to afford the increase? You estimate a $25 per ton price for carbon, which would mean an almost 20 percent increase in electricity spending for the average family. Some people say that in order for it to make a difference, it would have to be an even higher price._ > > Well, first, **you don’t have to do it all at once**. In fact, **I think it would be a good idea to do it gradually** , so people can change their lifestyle to accommodate to the changing prices. It’s not something that you want to happen overnight. BTW the same interview was pointed out several times in past discussions. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [July 4, 2014, 8:26pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/86 "2014-07-04T20:26:44Z")
> [@GIGObuster](#): > > Somehow I think the buggy whip manufacturers in heaven are smiling at that simple idea. I think I would laugh at someone who criticized buggy whip manufacturers for not diversifying into whaling for oil. Perhaps it actually does take some specific skills to be successful at an enterprise. If I were in the solar power industry, I would probably take it as a criticism that someone thought it was so easy to get into it that a company life Anadarko, for example, could just step right and and compete. > [@GIGObuster](#): > > Well I do think that someone like Nordhaus, that was just appointed President of the American Economic Association to have a better idea on what we should be doing. > > [http://www.salon.com/2013/10/30/william\_nordhaus\_smoking\_can\_teach\_us\_about\_climate\_change/](http://www.salon.com/2013/10/30/william_nordhaus_smoking_can_teach_us_about_climate_change/) > BTW the same interview was pointed out several times in past discussions. Interesting stuff. Was that meant to refute something I said? I’m pretty sure it didn’t. If anything it augmented my earlier comments about carbon taxes. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [July 4, 2014, 8:34pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/87 "2014-07-04T20:34:42Z")
> [@GIGObuster](#): > > Actually you started the OP by declaring that “Seems like most threads discussing climate change inevitably have someone talk about how evil Big Oil secretly funds all the Climate Change denialism going on.” The “some people” you are referring are the people from this message board indeed. And maybe you have others in mind, but as I also remember what \*\*wolfpup \*\*linked also in the past, it is clear that your say so does not apply to most of the ones that are aware of the issue in the dope. Thanks for this response. In your opinion, are the oil companies I linked to earlier denialists? ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [July 4, 2014, 8:36pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/88 "2014-07-04T20:36:05Z")
> [@LonghornDave](#): > > Totally disagree. What happens if tobacco companies say that because their product is harmful they will no longer make it? Some consumers get upset that they can’t buy it anymore. What happens if oil companies stopped producing oil? Society completely breaks down. Even if oil companies were completely altruistic beings, they would needfully have to work on a long transition away from their products? OK. So you do not know how analogy and comparison work. Fair enough. Since no one has called for the oil companies to shut down and stop producing oil, your point is nonsense. There was a specific analogy posted and finding nitpicky nonsense to complain about it that avoids the actual analogy does not make your point. > [@LonghornDave](#): > > That’s an absurd criticism of my post. I not only posted single line comments, however bland you believe them to be, I also included specific links that in some cases were long proposals of concrete actions some of these companies are taking. Take a look at the Apache one for example. Apache? So what? What “concrete proposals” came from ExxonMobil, (that tried to bury the issue with vague allusions to other issues)? Where are the “concrete proposals” from any of the truly large outfits? **More to the point, you actually committed the fallacy of equivocation in the first two sentences of your own OP** , and your whole “debate” is based on that error. You noted that people have lodged the accusation that “Big Oil secretly funds all the Climate Change denialism,” then avoid a direct response to that accusation by saying _well they don’t deny it on their website_. So what? The point of everyone who has criticized the OP is that regardless of any feel-good lines that appear on a website, Big Oil is, indeed, funding climate change denialists–a point that you have refused to address with a single fact. > [@LonghornDave](#): > > I find it pretty insulting of you to state that all I did was post one line comments. The attempt was to show that it isn’t just one single company, it was essentially every single company that a person would possibly consider Big Oil. How could I possibly convey that in a single message board post format in a way better than what I did? If I focused on all of the efforts of a single company, it wouldn’t in any way show that the overall industry does not deny climate change. You are fixated on the wrong points–as you have been throughout this thread. The issue is not that you only posted the one-liners. The point is that you have not provided two specific things for which you have been asked: where is the refutation of any specific post claiming that Big Oil is funding the denialists? where is any evidence that they support genuine science into the issue? > [@LonghornDave](#): > > So, since you are a moderator and have likely are very experienced in reading thousands if not millions of posts, how would I have better shown what I was attempting to show? Do what I asked. Several posts in this thread have pointed to Big Oil involvement with the denialists. Find the evidence that sows those citations to be in error. You brought up the topic. If you were not prepared to discuss it, you should have left it alone. (Refraing from the bait-and-switch argument you first offered would also have been a good idea.) > [@LonghornDave](#): > > So you are saying I have set up a strawman? Must be inadvertent by me. I’m saying that some people claim that Big Oil are denialists and that this is not true. For this to be a strawman I would need to be replacing some other argument that people are making and replace it with this very simple to refute one. Since I am only interested in refuting this specific argument and not some other hypothetical argument that people are making, it isn’t by definition a strawman. Now, I take it since you think this is a strawman, I guess I have two questions. > > 1. What argument that people make do you think I am replacing? > 2. Have I provided persuasive evidence on this so-called easy to refute argument that I am attempting to defeat? You are doing it again–same bad logic. You did, indeed replace one point of discussion with a different answer. No one, (certainly no one that you have actually made the effort to quote), has claimed that Big Oil has “denied” Climate Change. You, yourself, have noted that the accusation is that Big Oil funds efforts to deny Climate Change–a charge that you resolutely refuse to address. ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [July 4, 2014, 8:36pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/89 "2014-07-04T20:36:58Z")
> [@LonghornDave](#): > > Nor did I say they did. I said that this massive difference makes the oil industry and tobacco industry not at all analogous in their responses to public concerns. And you are wrong. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [July 4, 2014, 8:37pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/90 "2014-07-04T20:37:57Z")
> [@LonghornDave](#): > > I think I would laugh at someone who criticized buggy whip manufacturers for not diversifying into whaling for oil. Perhaps it actually does take some specific skills to be successful at an enterprise. If I were in the solar power industry, I would probably take it as a criticism that someone thought it was so easy to get into it that a company life Anadarko, for example, could just step right and and compete. No, that is missing the point, as \*\*Farin \*\* inferred only by realizing that they are into the energy business is that they can evade the fate of those makers. > [@LonghornDave](#): > > Interesting stuff. Was that meant to refute something I said? I’m pretty sure it didn’t. If anything it augmented my earlier comments about carbon taxes. I’m only saying, it is like I remarked on how mistaken idea that posters involved in the issue were not aware of what the Oil companies are saying officially. Your idea that proponents of change are not aware of what you claimed about not stopping using oil this instant is also \*\*not \*\*what I or others claimed. Just saying. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [July 4, 2014, 8:44pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/91 "2014-07-04T20:44:19Z")
> [@LonghornDave](#): > > Thanks for this response. > > In your opinion, are the oil companies I linked to earlier denialists? Since there is evidence of companies like Exxon funding denialist sources in the past, it is clear that the answer was yes. Nowadays the funding is indirect, and the point I made is still there: what companies claim now is just hooey if they are not discouraging their members in the open to stop funding deniers and politicians that do the same. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [July 4, 2014, 9:09pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/92 "2014-07-04T21:09:09Z")
> [@LonghornDave](#): > > I’m certainly not seeing any evidence that Exxon was donating dollar amounts that would possibly have the affect you are claiming. For example, show me the evidence that Exxon was donating enough money to basically dictate the policy positions of a dozen Republican presidential candidates. Giving $3 million spread across 30 companies doesn’t mean anything to me. That’s nothing and should have absolutely zero affect on anything. Certainly public statements claiming they absolutely agree that Climate Change is real and man made massively outweigh that sort of piddly little donation. There are a couple of very basic bottom-line conclusions one can make here, and neither of them should be controversial. The first and most fundamental is the vast and, on the face of it, rather inexplicable gulf between what the science is telling us about climate change and what a big portion of the general public believes – and what many of them believe fervently, absolutely, and with visceral emotion, often based on really major misconceptions. So much so that, as already said, any Republican politician who aligns himself with the science does so at his great peril, and even most Democrats prefer not to talk about it much. This absurd situation is a fact – not something you can dance around – and the question is, how did it come about? A quick survey of Internet sites shows that rancorous websites denying AGW abound and greatly outnumber the relatively small number of sites that discuss legitimate science, so this public ignorance and misperception of facts can be thus explained, but what is its origin? Who has the greatest vested interest in climate change denial, the most money to engage in it, and a clear track record of having done so over many years? The oil companies. They are by no means the only culprits – there’s the coal companies and much of heavy industry, and their wealthy owners personally, like the infamous Koch brothers. But the oil companies bear a huge brunt of the responsibility. There seems little point in reposting the links to the denialism funding studies that I posted before. (ETA: IIRC the UCC study I linked attributes about ten times your stated $3 million to Exxon denialism funding – more like $29 million or so.) The second conclusion I will make is about your OP and the entire thread you started. It’s not appropriate to second-guess your motives and I have no basis for doing so, but the “not a strawman” argument has now developed into the assertion that you simply said that oil companies were acknowledging AGW on their websites, and didn’t intend to say or imply any more than that. Fair enough. What I conclude is that, whether you meant to do it or not, those links are misleading. That is the real point. No one cares what they “say” on their websites, what is important is what historically these companies have done, and what they continue to do. Exxon to this day for example continues to provide financial support to the Heritage Foundation, one of the most activist and notorious sources of lies about climate change (or to be more accurate, their contributions are traceable up to at least 2012). Coal-mining industrialists like Robert Murray are trying to sue the EPA while publicly lying about the reasons and about the facts of climate change. The Koch brothers are providing vast amounts of funding to climate change denial while egregiously violating environmental laws. The oil companies have historically been absolutely in lock-step with these sordid activities and you may choose to believe that all of them have suddenly and mysteriously reformed, but I don’t. Their public statements are the absolute minimum they can say about climate change without drawing the kind of public ridicule and chastisement from scientists and responsible politicians that Exxon, for one, has already attracted many times. So the implication that these companies are voluntarily presenting an accurate view of science, and doing so because they’re such good upstanding citizens, is utterly without merit. If they were, they’d be trying to reverse the absurd public misconceptions I described above instead of continuing to inflame them, and, as a few companies are starting to do, they’d be diversifying into energy sources that actually have a future. Until they do that, their pious wishy-washy website platitudes are worthless. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [July 4, 2014, 9:22pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/93 "2014-07-04T21:22:54Z")
> [@Leaffan](#): > > I still don’t see the alternatives to petroleum right now. There aren’t any. There are such things as electric cars; they must be charged, of course, but there are also such things as power sources other than fossil fuels. ---
**Author:** ![Kobal2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kobal2/32/20_2.png) [@Kobal2](https://boards.straightdope.com/u/Kobal2)\ **Post date:** [July 4, 2014, 9:27pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/94 "2014-07-04T21:27:54Z")
> [@LonghornDave](#): > > However, I don’t really see what you are saying as a refutation of what I said. I absolutely don’t think European society would be any good example of a society where fossil fuels are not a necessity. European society would absolutely collapse if they had to stop using all forms of fossil fuels tomorrow. Natch. But the \*scale \*of the necessity is lower, even per capita. As is the waste. But that aside, I also disagree with your seminal point re: the incomparable nature of Big Oil and Big Tobacco when it comes to their lobbying efforts and their PR. What does the absence of necessity for tobacco have to do with anything ? ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [July 4, 2014, 9:44pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/95 "2014-07-04T21:44:09Z")
> [@BrainGlutton](#): > > There are such things as electric cars; they must be charged, of course, but there are also such things as power sources other than fossil fuels. I said it before but the irony bears repeating: **Leaffan** lives in Ontario, in which about 85% of the electric power comes from clean nuclear and hydro, with a further relatively small percentage coming from some of the largest established wind farms in Canada. I love irony. 🙂 ETA: Ontario was also the site of a huge coal plant demolition, the Lakeview coal generating station, which was demolished and properly reduced to rubble in 2007. ---
**Author:** ![KarlGauss](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/karlgauss/32/3713_2.png) [@KarlGauss](https://boards.straightdope.com/u/KarlGauss)\ **Post date:** [July 4, 2014, 10:34pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/96 "2014-07-04T22:34:26Z")
> [@Kobal2](#): > > . . . decentralized power generation using local resources (i.e. household waste, wood chippings, vegetables etc…) as fuel, which not only generates power but produces harvestable heat and reduces the need for fuel transports. Compared to centralized power generation, it also reduces the loss of power inherent in a hub-like network. The problem there is that bio-diesel generates just as much GHG as the other kind - but it’s not fossil GHG introduced to the atmosphere so it’s still an improvement. (emphasis added) I don’t follow - can you please elaborate on what you mean by the underlined sentence. In what way are bio-diesel-dervied GHGs an improvement? Thanks. ---
**Author:** ![Farin](https://avatars.discourse-cdn.com/v4/letter/f/e79b87/32.png) [@Farin](https://boards.straightdope.com/u/Farin)\ **Post date:** [July 4, 2014, 11:11pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/97 "2014-07-04T23:11:55Z")
> [@LonghornDave](#): > > First, my tone was probably overly rude in my previous post, so I will try to avoid that going forward. Some of the company’s you listed are not conglomerates. As was mine. > [@LonghornDave](#): > > However, the main point is that conglomerates were a fad that primarily existed in the 1960s. That doesn’t mean none exist today, but that they are generally looked at poorly. It is generally thought that conglomerates trade at a discount. It is also generally thought that it is better to let investors diversify on their own as opposed to diversifying within a company in an unfocused way. Also, I believe this statement of yours is nonsensical. Because, for both your point and understanding as “nonsense,” is because you are looking at it from one, single fixed angle. Ignore investors. They don’t matter here. There are shareholders to a single corporation, but ignore them, too, and follow this business process. Company A makes widgets. Widgets are a hot craze and make huge amounts of money. They have become a true company. Now that they are giving returns of a certain magnitude, they have a market cap that they can tap into. Using this market cap Company A internally expands. New production facilities/capabilities, new people, new corporate (e.g. non-production) staff. Five years go by. Widgets are at market saturation. The shareholders don’t go “Oh, your wildly profitable days are over? Well, that’s fine. We’ll just park our money in your company for the rest of time.” They want as good or better returns, usually in as short a time frame as possible or they flee. (Of course, there are times when shareholders will give leeway to a previously top performer and allow a year or two to get back on the ball, but this varies based on so many factors it’s not a sure thing to any company at any point in time.) So, when the Widgets start declining in market value there are two things a company can do: Buy a company with the market cap leverage it currently has available to increase (ideally forever, realistically in the short term) it’s return and make shareholders happy with their return. At the beginning, the purchases will make sense to the core business. Maybe they buy a company that produces a prerequisite for the widget that also sells to other companies. As time goes on, the purchases get further away from the original core. This is starting a conglomerate and it’s what most extant companies do to stay alive. But, there is the downside, like you alluded to: Stocks are no longer rock stars. They don’t shoot up and have huge returns. For this, the performance-oriented fund managers stop using them. But, they still exist. Conglomerates in various stages are here and all around you. > [@LonghornDave](#): > > Most would agree that diversification of investments is an overall good thing. Rather than achieve diversification by having a company itself diversify, it is thought to be better to let the owners of companies diversify on their own based upon their own specific needs and preferences. Your statement seems to act like companies diversify for the investors’ good but not because their investors want it. Companies are ultimately run by investors, so I don’t see the sense in your statement. Companies are not run by investors. They are run by boards that are “Sensitive” to investor demands. Some companies are given carte blanche while other companies are riddled with activist investors/investor groups. Most are somewhere in the middle: An activist investor group or two with a lot of silent investors. > [@LonghornDave](#): > > Most oil and gas companies do not deal in any way with retail customers. They sell their product to other large companies. It is only portions of the downstream part of the business that deals with retail customers, and most oil and gas companies have zero little of that. The upstream oil and gas companies have zero dealings with retail. Forgive my shorthand. Retail = End-of-line customer for this situation. I believe I made that clarification before. If the sale to another company ends with that company, they become the “Retail” customer in this case. > [@LonghornDave](#): > > Having said that, the issue with some sort of tax increase on companies producing a commodity is that it won’t affect all producers of the commodity. This of course depends upon the specific structure of the tax, but let’s say it relates to the production of oil. Why, yes, the specific structure of a tax will alter how the tax is applied. > [@LonghornDave](#): > > Since oil is a global commodity, unless all countries tax equally it will be an additional expense for those being charged it. Why, yes. The US will only be taxing US-production (if they go with a production tax). > [@LonghornDave](#): > > However, unlike a basic retail product, commodities are priced off of exchanges. An oil company can not simply just raise the price of their product. It doesn’t work that way. Commodities on exchanges take into account the cost of production as part of their price structure. If the cost of production goes up, the pricing goes up to compensate. Now, assuming a perfect market, this pricing may reduce back to pre-tax rates and impact final profit. But that’s a decision the market makes. Also, note, that by driving up the production cost of American oil, we could simply not be purchased from if the production tax is setup like a minimum price per barrel. I > [@LonghornDave](#): > > Even if the tax is added on the retail customer, increased taxes will harm producers as it will destroy demand. Will oil is more inelastic than some other products, demand does fall when the cost increases. Particularly so if the cost increases make substitutes cheaper. But the demand fall off is: A) Fairly small for oil products; B) Would have to be huge to convert people to completely different power sources; C) Even at $4.50+/gallon as the US hit (which is, depending on where you are, a 75c - $1.25 tax per gallon), people didn’t massively convert to another power source; D) hurts the poor significantly worse than any other players. Now for my point: In any situation, any cost increases are going to be played as “Oh, this is because of the new tax by the government. Sorry, guys.” So if the pump price goes up to $4.50 a gallon (as a for instance) there will be incredible pressure on the government to drop that new tax. It won’t be blamed on the oil companies as the last round of fuel price hikes were. Also, while this is complex in any scheme, any taxes will be shifted to the final consumer as additional cost which will not be borne by the mining/production/refining segments of the oil chain. > [@LonghornDave](#): > > You probably already know this but EROI varies considerably from one type of oil production to another. For example, shale plays versus deepwater versus conventional onshore versus tar sands versus secondary recovery versus tertiary recovery, etc. Yes. But I believe the lowest EROI for shale is in the 2-range. I’m not sure which those fields are (and also looks at only oil crude from shale, not the other products you get from fracking, which are moving towards an integrated well setup). > [@LonghornDave](#): > > However, what I was really referring to is that many of the major integrated oil companies (which were only a few of the company’s I had in my original post) also have refineries. Clearly are large consumers of oil, and certainly are negatively affected when crack spread dynamics change, which would be a likely outcome from some sort of carbon tax. > [@LonghornDave](#): > > Which down years are you think of? Oil companies were floundering in the recent 2008/2009 period? I can show you dozens and dozens of bankruptcies. While big guys like Exxon made it through okay, their stock price nearly dropped in half and earnings were more than cut in half. The independents fared far worse. Yes, the small(relatively) niche oil companies did fare worse than the vertically ingegrated ones. But the ones that survived produced a profit, despite earnings slumps. > [@LonghornDave](#): > > Some people are talking about some pretty large carbon taxes. Also, even small reductions in demand can cause certain types of production to become uneconomic. It isn’t making it uneconomic for Saudi Arabia to drill, but it might make it uneconomic for a Bakken producer if the price of oil fell. And why do you think this is good? > [@LonghornDave](#): > > That’s not really true. While clearly most oil sales use a futures price benchmark, it is the front-month futures contract and usually includes some sort of mechanism to mimic and spot price. In the U.S., a very common pricing formula would by the average daily front-month NYMEX futures price for the month less a 2/3-1/3 calendar roll (takes into account the contango or backwardation of the curve to mimic a spot price) less some sort of transportation or quality deduct price or minus some location differential. The basic point is that current pricing is based off of the currently traded price and not some future price. > [@LonghornDave](#): > > However, I don’t really see your point. You seem to be saying that if you know the tax is coming into effect you can adjust your contract price to account for this. That can’t be done since you have no control over the price since it is based upon an exchange traded futures contract price. Sellers simply do not control their sales price in commodities. Why do sellers not control their contract pricing, even if it’s anchored to an index? It would be simple to insert language to increase the price, even if some of their contracts don’t do that. Additionally, the spot price market would certainly take this index up over time somewhat as the taxes increase the production costs (assuming, again, it’s a production tax of some kind). > [@LonghornDave](#): > > However, you are fundamentally thinking about it wrong. Production companies sell oil on floating price contracts not fixed priced contracts. Refineries buy oil on floating priced contracts not fixed priced contracts. You are simply misinformed to think otherwise. You are correct, according to Platts. I was confusing or conflating term contracts, in terms of duration and volume, with the actual costing methodology used. > [@LonghornDave](#): > > I don’t really disagree much although I do think energy sources that put off less CO2 would gain some. Gas gains over coal for example. Actually, because of fracking, this is already happening. Because of the low cost and relatively easy collection of gas from fracked natural gas wells, the energy sector has been converting for 3-8 years from coal plants over to natural gas generators. And, with a much cleaner burn than coal and an additional [2,203 tcf](http://www.eia.gov/tools/faqs/faq.cfm?id=58&t=8) of technically recoverable gas, those generators will run for a long time. Taxes, at least at this point, don’t seem warranted. Perhaps subsidizing the installation of natural gas plants would make it faster without hurting those at the bottom of our society? > [@LonghornDave](#): > > While I do not have a fully formed opinion on this proposal, it just sounds impossible. It doesn’t sound difficult, it sounds downright impossible. Why? Granted, there’d have to be a phase in for a proper scrubbing technology to be adopted (mainly because the technology is in it’s infancy), but the initial setups would be continually improved so that they would increase in effectiveness over time. Additionally, companies would be driven to reducing the cost of the scrubbing they’d have to do to have a lower cost. > [@LonghornDave](#): > > Well, government would certainly have to regulate that, which would also be incredibly difficult and costly. In terms of enforcement, well, if it were done right it wouldn’t be that difficult or expensive - weight the output of the scrubbing/sequestration technology minus whatever substance it’s stored in or stick some CO2 monitors around the reclamation system to monitor local CO2 concentration. Granted, enforcement by the US Government is never useful. I’m sure some company would get off for 20 years by sticking lead in the middle of their scrubbing technology and using that to weight down the output, or similar. > [@LonghornDave](#): > > The benefit of a tax is that it is simple, and generally easy to understand and comply with. It also makes some logical sense in that generally greenhouse gas emissions are placing a cost on society that people emitting them should pay for. Here’s where i diverge on the tax angle: The US Government, in particular, has never been very trust worthy with managing it’s cash flows. Take any program in our history and you’ll see a huge long-term trend to “borrow” from those funds for any little thing that comes up. It’s one thing to borrow for an emergency or disaster, it’s another to spend $200 million of highway trust fund on various museums tangentially related to the automobile. In terms of the cost on society, it makes much more sense for those costs of mitigation to be performed by the producers of the fuel and born by the ultimate consumers of that fuel than to add a tax to try and drive behavior. The tax will be changed so many times that it’ll disconnect it’s actual purpose from what it’s doing. And, as soon as it’s overly burdensome, there will be intense pressure to repeal it. While all of that is going on, it’ll utterly screw anyone at the bottom of society. Additionally, this “cost of carbon” won’t actually be dealt with. The taxes will start now and in 50 years when they have to actually move to mitigate an issue, do you think they’ll have 49 years of back-taxes to mitigate that issue with? Oh, heck no they won’t. That 49 years of taxes will have been spent just about everywhere else. > [@LonghornDave](#): > > But generally speaking, they aren’t the consumers. And, they do speak quite a bit, nearly every one of them that I researched, about their efforts at reducing their own emissions. For example, most talked about reductions in fugitive methane emissions and reductions in flaring. However, when you are talking about reductions of oil consumption, shouldn’t that be done at the consumer level? Again, I simply don’t see the hypocrisy in a producer saying that consumption should be reduced or that the growth in consumption should be reduced. Let me put it this way: You grow and refine opium. You do what you can to keep the fertilizer away from the water table. But you don’t also get to say “Oh, well, we think that people should stop using opium products. It’s way bad, man.” If they say that, I think that it would be be fine to call them a hypocrite. As for consumers, I do agree with one of your points (Somewhere in this thread) that there aren’t any useful or awesome alternatives, and the best bet for a useful alternative (nuclear) is currently in a bureaucratic nightmare of red tape in the US. But I also support going full nuclear powered, with batteries in every car. In the meantime, I support the current movement over to natural gas. Better and cheaper. > [@LonghornDave](#): > > How would Exxon possibly go about doing themselves what they are promoting?For example, how could they possibly personally enact the following? You’ll note that Exxon’s statement is specifically tailored to stop them from having to do anything on their production side of the fence. And I outlined policies that they could do for the other part of their statement. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [July 4, 2014, 11:13pm UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/98 "2014-07-04T23:13:33Z")
> [@KarlGauss](#): > > I don’t follow - can you please elaborate on what you mean by the underlined sentence. In what way are bio-diesel-dervied GHGs an improvement? Thanks. Biofuels are only a stop-gap solution, but their advantage is that they re-introduce into the atmosphere CO2 that was sequestered by present-day organics – that is, CO2 that is part of the active carbon cycle. Burning coal and oil re-introduces into the atmosphere CO2 that was sequestered hundreds of millions of years ago, when the earth was, for all intents and purposes, an alien climate to which nothing in the present is adapted. ---
**Author:** ![Kobal2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kobal2/32/20_2.png) [@Kobal2](https://boards.straightdope.com/u/Kobal2)\ **Post date:** [July 5, 2014, 6:19am UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/99 "2014-07-05T06:19:13Z")
> [@KarlGauss](#): > > I don’t follow - can you please elaborate on what you mean by the underlined sentence. In what way are bio-diesel-dervied GHGs an improvement? Thanks. Oil products involve digging into the earth for “new” stuff to burn, releasing into the atmosphere carbon that had been fixed in a semi-solid state since the dinosaurs. Bio-diesel releases plant-fixed carbon which the plants fixed over the course of their (relatively short) lifetime. It’s more of a zero-sum game in that regards : the plant vacuums CO2 from the atmosphere to grow, then you burn it and release it back. Net carbon increase : null. That’s the simplified, high-school biology theory anyway - I believe in practice it’s more complex than that and biodiesel does have some negative impact. Ain’t no such thing as a free, hot lunch. ---
**Author:** ![Budget\_Player\_Cadet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/budget_player_cadet/32/205_2.png) [@Budget\_Player\_Cadet](https://boards.straightdope.com/u/Budget_Player_Cadet)\ **Post date:** [July 5, 2014, 11:45am UTC](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303/100 "2014-07-05T11:45:15Z")
You know, on one hand you have these short statements by parent companies. And on the other, you have [this](http://en.wikipedia.org/wiki/Soon_and_Baliunas_controversy#Funding_controversy), where a demonstrably bullshit denialist paper was bought and paid for by the oil industry. I’m not entirely sure if they’re putting their money where their mouth is on this one. [Previous page](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303.md?page=4) [Next page](https://boards.straightdope.com/t/big-oil-are-not-climate-change-denialists/692303.md?page=6)