The Real Cost

Yes, yes and another yes to George Monbiot’s latest blog post, The Money Gusher, in which Monbiot muses on the real cost of extracting fossil fuels. BP and other fossil fuel corporations just do not prepare adequately  for exigencies such as the Deepwater Horizon spill or global warming, nor do they charge the real price of oil in order to do so. They do, however, ensure that shareholders get their due. The rest of us? Nickle and dime.

Here’s Monbiot:

“Pollution has been defined as a resource in the wrong place. That’s also a pretty good description of the company’s profits. The great plumes of money that have been bursting out of the company’s accounts every year are not BP’s to give away. They consist, in part or in whole, of the externalised costs the company has failed to pay, and which the rest of society must carry.

Does this sound familiar? In the ten years preceding the crash, the banks posted and disposed of stupendous profits. When their risky ventures failed, they discovered that they hadn’t made sufficient provision against future costs, and had to go begging from the state. They had classified their annual surplus as profit and given it to their investors and staff long before it was safe to do so.”

This has been the essence of my criticism of the price of fossil fuel for years — we as consumers have never paid the real cost of fuel because corporations have never been forced to do a true reckoning of the costs of producing fossil fuels. Why? Because governments have been either complicit — look at the oil interests among the Bush-Cheney government executive for example — or have been lax in regulating the fossil fuel industry to ensure it is safe and sustainable. Governments should have had effective policies, inspection and enforcement in place that regulated the industry to ensure that it was not polluting the environment, either through excess CO2 and other greenhouse gasses and pollutants or by the kind of catastrophe we see unfolding in the Gulf. Government should have had regulations in place to ensure that when they drilled, either in shallow or deep water that they were able to prevent  – or at least respond to effectively — the kind of disaster playing out now as a result of the Deepwater Horizon spill. They have consistently allowed industry to get away with less than was necessary as is made obvious by BP’s inability to cap the well for so long.

It’s not that people were unable to predict this disaster could happen — environmentalists and scientists alike have done so for years. Even Brit Hume admits as much. Ouch. That must hurt…

Of course, the history of the automobile and fossil fuel industry in America and the industrialized world, and now in the developing world, is complex and we in the developed world have all benefitted immensely from cheap fossil fuels, but we’ve danced the jig and now it’s time to pay up.  The price we have been paying has been a sham — it does not cover the real cost of development using fossil fuels.

Monbiot points this out — how the dividends BP will try to pay its shareholders and has been paying its shareholders over the past decades should have, at least in part, been going to ensure that their production processes are safe and don’t lead to the kind of catastrophe we are witness to today in Louisiana , Florida and elsewhere. Obviously, they won’t do it on their own — corporations, by their very design, are intended to maximize shareholder value and they will do pretty much everything legal — and oftentimes not so legal or outright illegal — to do so.

Politicians — the ones we cede our power to and expect will protect our interests as citizens — are deep in the pocket of corporations, relying on donations and jobs in their districts for election/re-election. They are only going to push so far without the threat of losing elections hanging over them. No party is immune to  this, although the length to which the parties go varies and depends on the characters involved. You can be sure that Bush and Cheney, as oil men, saw the role of government in regulating the fossil fuel industry in a different way than the rest of us might.

The effect of industry on the environment and on public health has never been factored into the price of oil and gas and byproducts. It’s high time they are.

Here’s Monbiot’s proposal:

“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(13), 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.”

It sounds great. It’ll never happen. No one has the testicular volume. Instead, we the taxpayer will pay the cost one way or the other when government picks up the tab.   BP’s shareholders will laugh all the way to the bank.

As Joe Romm says, it’s all a big ponzi scheme.

About Policy Lass

Exploring skeptic tales.

4 Responses to “The Real Cost”

  1. The Destructionist Reply June 8, 2010 at 5:53 pm

    As the oil spill in the Gulf grows larger and more deadly, decimating all that it touches, BP continues to turn down assistance from Americans who just want to help clean up the mess. (…I hear they even turned down Director James Cameron and actor Kevin Costner…)

    First let’s get one thing perfectly straight: If you want to go and help clean up the oil spill, don’t let some corporate Big-Whigs “handle” you into believing that you’d be more of a liability, than an asset. I applaud you for recognizing that we all depend on our oceans for our very survival. It is this water that sustains every living thing on our planet, and it is also this water that we must protect in order to save ourselves from extinction.

    BP has downplayed the problem in the Gulf from the beginning as a means of corporate damage control. I don’t think they’ve yet recognized the severity of the problem. As I’ve written in past blog posts; the pipe needs to be capped and the relief well needs to be drilled. It’s not an exact science by any means, and if BP doesn’t get it right the first time, they’ll have to do it over, and over, and over again, until they do. How many months (or years) will that take? How much damage will have been done to our environment by then? We’ve already seen what 51 days of oil can do to the Gulf of Mexico… What would happen if the oil was left, unabated, for several months, or years? It’s a frightening example of corporate greed gone awry and it’s criminal, pure and simple.

    Corporations should never be allowed the opportunity to risk the lives of everyone on the planet just to make a profit for a few shareholders. (What good is money, after all, if you don’t have air to breathe, water to drink, or food to eat without fear of contamination?)

    BREAKING NEWS: I’ve just heard that those enormous plumes floating just under the surface of the water have been certified by the National Oceanic and Atmospheric Administration (N.O.A.A.) as crude oil.

    (Are we just casual witnesses to our own demise? I wonder…)

  2. The Destructionist :
    BREAKING NEWS: I’ve just heard that those enormous plumes floating just under the surface of the water have been certified by the National Oceanic and Atmospheric Administration (N.O.A.A.) as crude oil.
    (Are we just casual witnesses to our own demise? I wonder…)

    You heard right.

    …BP and other fossil fuel corporations just do not prepare adequately for exigencies such as the Deepwater Horizon spill…

    You can say that again… Smart Pig: BP’s OTHER Spill (Alaska: Shoddy maintenance, understaffed, cost cutting again.)

  3. IMHO there are two fundamental issues at play here.

    1) The immediate cause of the disaster is caused not so much by BP but by the American phobia of big government. EU drilling is far more heavily regulated and therefore much less disaster – prone; Americans seem to regard govt regulation as infringing their rights. BP are actually rather more reponsible than the average US oil concern, and for a commercial organisation to spend significantly more than it’s competitors is commercial suicide. Obama’s attempt to blame BP is simply displacement – weak small government is the immediate cause.

    2) The root cause is simply the demand for oil outstripping our ability to safely extract it.

    My rather pathetic and naive hope is that the realisation of (2) will drive alternative energy sources and conservation thereby putting us on the road to mitigating AGW.

    My rather darker expectation is that the disaster will drive even more exploitation of the likes of tar sands, spiralling carbon emissions beyond any control.

  4. SheWonk, I encourage you to go over to Bart Verheggen’s and explain to Fuller and Mosher why BAU is not going to helps us meet out GHG reduction targets. I’m busy this week, and fond trying to engage the two a waste of time, but I suspect that you might have more luck……..

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