The illusion of profit

by Milan on June 28, 2010

in Air pollution, Climate change, Economics, Ethics

In Europe, thieves sometimes steal slabs of lead that have been used as roofing material on buildings like churches. When they do so, it is obvious that the act causes net economic losses for society. The thieves get the scrap metal value of the lead (minus their expenses) while the church needs to pay the cost of replacement lead, the price of installation, and any damages arising directly from the robbery or from their subsequent lack of a roof.

When climate change is taken into account, fossil fuel extraction has a similar dynamic to such robberies. The profits of oil, gas, and coal companies are large and immediately visible, but the wider costs to society still exceed them. They include everything from the people sickened and killed by air pollution to the land and species that will be lost to climate change.

The general public still seems to be a long way off from recognizing this. No doubt, that is partly on account of how they recognize the many useful and pleasant things fossil fuels allow us to do. Ultimately, moving beyond fossil fuels is a choice primarily motivated by concern for future generations. They are the ones who will need to deal with the downpour, after we have stripped away the roof.

Report a typo or inaccuracy

{ 6 comments… read them below or add one }

. June 28, 2010 at 8:47 pm

The Real BP Gulf Tragedy: What If There Had Been No Spill?

By Mike Kaulbars

What if there had been no spill? What if the oil had simply been loaded on to tankers and gone into processing by the petrochemical industry as intended? That’s the situation we’re trying to create when we talk about preventing such accidents, right? We don’t want the oil spilling into the ocean and killing the ecosystems there. So if there were no spill, what would have happened instead?

Some of the oil would undoubtedly wind up as the petrochemical based fertilizers and pesticides which are creating the dead zones in the Gulf when they are washed off of agricultural land. Also contributing to this killing of the oceans is all of the oil based cleaners, solvents and other products that we send down our drains.

Naturally a good proportion would go into the plastics that are so ubiquitous in our lives. Many of those wind up dumped into the oceans where they kill wildlife and form the huge garbage patches at the centre of the circulation gyres (the North Pacific patch is larger than Texas).

Some would help power the industrialized fishing that is destroying the worlds oceans. There is some evidence that the collapse of all fisheries could come in as little as three or four decades . Most of the oil would be burned for power, thereby producing more of the CO2 that is acidifying (ie killing) the oceans.

The extraction of oil is a catastrophe whether it goes as according to plan or not. We are not talking about whether we save the Gulf or not – we are quibbling
about whether we get to use the oil before it kills off the oceans. That is the only thing that is at issue. Either way we destroy the Gulf, so can we please stop pretending otherwise?.

More to the point perhaps, the destruction is being done to provide us with the goods and services that we choose to pretend are necessary for us. Our personal involvement is very direct and tangible; it is our consumerism that is driving it. The lies we tell ourselves now about “what we need” are going to become apparent when we lack the things we actually do need, like food and water.

Milan June 29, 2010 at 9:35 pm

George Monbiot makes a similar point:

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 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.

Tristan June 30, 2010 at 2:38 am

Excellent post.

. July 1, 2010 at 2:03 pm

SIR – I would suggest that the message of the $20 billion escrow fund and other demands on BP is that if your company destroys the Gulf of Mexico, you may indeed be subject to extraordinary government intervention. Similarly, if your firm’s risky investments threaten the entire financial system, unusual measures may well be taken.

Perhaps the best lesson for corporations is that if you want to keep the government’s hands off your business, avoid creating massive environmental or financial catastrophes. Following basic safety rules, or basic principles of sound financial risk management, might be a good start.

Jonathan Harris
Global Development and Environment Institute
Tufts University
Medford, Massachusetts

G Rayner July 26, 2010 at 5:18 pm

Dear Milan and colleagues

First of all, congratulations on the creation of such an intelligent and thoughtful website. What I like about it is the primary author’s very balanced, polite, but committed perspective. That is the say the connections are thought through and there is an absence of aggressive, simplistic banter so often found on some many (usually right wing) blogs.

Not everything is perfect however. In the case of your correspondent, Jonathan Harris, I don’t really think Mr Harris has thought through his position very well. Rather he appears to have jumped on the anti-BP bandwagon (very easy to do of course!) without thinking through the complexities and complicities in the state/energy industry relationship, which is in many ways akin to that of the coal industry.

Let’s look at the reasons for this opinion. First, the American state is not innocent, so it is not quite the picture of a shocked Mr Obama confronting a malfeasant (conveniently, British!) company. It was the US state which allowed deep sea drilling in the Gulf, established a lax regulatory regime and allowed petrochemical companies to pay millions to politicians. Just by way of contrast, it was the US state which while hypersensitive to events in the Gulf turned a blind eye to the much larger tragedy in Bhopal. (Not just the state of course, but almost the entire press and media.) Where are the huge fines and prosecutions there! Finally, and here is the question, when will the US state really commit to major efforts to reduce its dependency on dirty energy? If Obama uses this incident to press ahead in this direction then something good may flow from it, but as yet, I don’t see it.

Oil spills occur routinely and it is the poorest communities (look at Nigeria) which principally suffer and the political system (including in the US) which gets corrupted. This is yet another version of the King Coal story. The point I am making (and I don’t want to denigrate Mr Harris with whom I will probably agree on most environmental matters) is that roots of complicity with the energy industry are very deep and while it might be nice to imagine that the world can be divided according whether a company’s hat is black or white, this is hardly the truth of situation. And it is even less than adequate grounds for preceding to rectify the enormous problems created by the energy transition.

G Rayner

. March 30, 2011 at 7:03 pm

THE rising price of metals over recent years, fuelled by booming demand in China and other emerging economies, has caused thieves to turn their attention to things that would previously not have merited a second glance: rubbish bins, manhole covers, traffic lights, industrial piping and—perhaps most worrying—electrical cables, telephone lines and the wires that control railway signals. In one English county alone, the West Midlands, 52 thefts of metal from railways over the course of 18 months have resulted in the delay or cancellation of 1,500 trains, according to Tom Watson, a local member of Parliament. Indeed, Paul Crowther, deputy chief constable of the British Transport Police, the force responsible for keeping an eye on the railways, describes metal theft as the second-greatest threat, after terrorism, to Britain’s infrastructure.

Leave a Comment

{ 1 trackback }

Previous post:

Next post: