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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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Should Big Oil Pay For Climate Change?

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On Wednesday, New York City announced that it would sue the five oil majors—ExxonMobil, Chevron, ConocoPhillips, Royal Dutch Shell and BP—over their role in fueling climate change.

Also, New York City Mayor Bill de Blasio said that the city’s $189 billion pension fund would divest itself of fossil fuels, although such a move would need to be approved by the funds’ trustees. “This is a tragedy that was wrought by the fossil-fuel companies,” de Blasio said at a news conference. “We are going after those who have profited. And what a horrible, disgusting way to profit.” The proposal would withdraw the $5 billion it has in fossil fuel investments.

The lawsuit seeks compensation for the cost that the city would incur to insulate itself from the effects of climate change, which would include a long list of actions, such as upgrading sewer and water infrastructure, coastal defenses, seawalls, and a variety of public health measures. “In this litigation, the City seeks to shift the costs of protecting the City from climate change impacts back onto the companies that have done nearly all they could to create this existential threat,” the complaint from NYC said.

The oil majors largely dismissed the suit. Chevron said the compliant was “factually and legally meritless,” according to the WSJ. The other oil majors intimated similar messages, while also acknowledging that there needs to be some sort of large-scale effort to address climate change, although they were vague on what that actually meant in practice.

“Reducing greenhouse gas emissions is a global issue and requires global participation and action,” Exxon Mobil spokesman Scott Silvestri said. “Lawsuits of this kind -- filed by trial attorneys against an industry that provides products we all rely upon to power the economy and enable our domestic life -- simply do not do that." Related: Grading 2017 Oil Price Predictions

That remains to be seen, but the lawsuit does face long odds. The cities of San Francisco and Oakland previously sued fossil fuel companies for damages related to their role in climate change.

As Bloomberg notes, the lawsuit in New York hinges on the concepts of “public nuisance” and “private nuisance,” well-worn legal concepts that have yet to be applied to a problem as complex as climate change. “There isn’t anything you can point to and say, ‘This is exactly like that case,’" Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia Law School, said in a Bloomberg interview. “This is new.”

Other lawsuits in the past were unsuccessful. Several years ago a group of states sued using federal public nuisance laws targeting power plants, but the Supreme Court ruled in 2011 that enforcement for greenhouse gases was left to the EPA, preventing states from bringing suits.

But the latest effort from New York City alleges that the oil companies have violated state law. Part of the allegations stem from decades of knowledge and scientific research on behalf of the oil industry into climate change. The claim is that ExxonMobil and its peers had a sophisticated understanding of climate change but denied it to the public. This echoes a separate investigation by New York Attorney General Eric Schneiderman into ExxonMobil.

“Defendants are also responsible for leading the public relations strategy for the entire fossil fuel industry, downplaying the risks of climate change and promoting fossil fuel use despite the risks,” the complaint said. In this sense, the suit has parallels to the tobacco industry, which mislead the public about health risks of smoking.

Related: The Biggest Loser Of The OPEC Deal

The divestment of the city’s pension fund will take time, comptroller Scott Stringer said. “We’re setting a formal goal to divest from fossil fuels,” he said, before adding that any decision would take time and would need to be viewed through a “lens of sound fiscal stewardship.”

Critics of the fossil fuel divestment movement typically point out that such actions have little to no impact on company share prices. Even if stock prices took a hit, that would merely create a buying opportunity for other investors.

But that ignores the larger significance of the proliferating number of commitments from public and private institutions to fossil fuel divestment. The more major institutions line up against oil companies, the more it mars their images and the more pressure it builds for the policy and regulatory measures that would ultimately force the oil industry to keep reserves in the ground. It remains to be seen if such a campaign will bear any fruit, but getting New York City on board is one of the most significant actions to date.

By Nick Cunningham of Oilprice.com

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  • Mike on January 11 2018 said:
    The Mayor will next order the immediate halt of all hydrocarbon energy use in New York City. That willreally make a statement....
  • Randy V on January 11 2018 said:
    For openers, based on the lack of recent "traction" by the NY Attorney General on the floundering "Exxon Knew" campaign, it would seem that the claim BIG OIL had climate change all wired out decades ago looks dubious, at best. To use the tobacco argument is disingenuous and absurd. Big difference between a useful product like oil & gas which benefit everyone's modern lifestyle & a cigarette. I think most folks can clearly make that distinction.

    You are probably aware that Exxon has (already) countered claims by Bay Area governments in California that many of them made NO MENTION of climate risks when issuing bonds to investors in recent years. Securities fraud, perhaps? Can't have it both ways. As for New York and MANY areas along the east coast, I have a suggestion for a more introspective approach. When you build your cities (basically) at sea level and wipe out most of your natural wetland protections, why should you (now) be surprised that any material change in that sea level will have a significant impact? In a phrase, looks like "SOUR GRAPES" to this humble reader...
  • Tom on January 11 2018 said:
    True Leadership solves its problems rather than blame others and look for a handout or law suit. NY Leadership is nothing short of sickening here. Nothing short of sickening.
  • David on January 12 2018 said:
    Randy V, the issue here is that Big Oil researched and confirmed the effect of their product on global temperatures. Assuming this is/can be proven without a doubt, then they are liable and comparing them to the Tobacco industry in the way information was obfuscated is justified. Not only did they fail to publicly report a potentially major global issue that their product is likely to create down the line which will cost trillions worldwide and claim many lives, in addition they seem to have done what they could to convince the public that there is no problem with their product. In my opinion, this is criminal negligence through willful disinformation of the highest degree considering the potential damages over decades and possibly centuries to come. My prediction is that people involved in obscuring, misinforming, and flat out preventing action to address the problem at hand will face far more serious charges down the line. The current lawsuits are small potatoes in comparison to the kind of charges that might be filed in the coming decades.

    As for the location of cities, I hope you're not suggesting that settlers hundreds of years ago should have known about the potential effects of climate change due to fossil fuel use. That would be ludicrous.
  • Roger Spring on January 12 2018 said:
    This morning, the mayor will awake to his domicile being heated by hydrocarbons, he will drive to work in a vehicle fueled by hydrocarbons, his office will be heated by hydrocarbons.... yet he sues oil companies for providing his comforts.... if he wants to go back to living in the colonial days, burning wood and suffering, I say he's an idiot. I like being warm and cozy, thank you oil companies..
  • Jarred on January 12 2018 said:
    David, here is my main problem with all the talk on climate change and making "Big Oil" pay for it. If you David are worried that fossil fuels are gonna wipe us out, are you still driving a car that burns fossil fuels? Are you still heating your home with natural gas or heating oil? Until the environmentalists stop using fossil fuels and start riding bicycles or walking everywhere they are just as much to blame as anybody. You can't sue Big Oil for providing a product that society has benefited from immensely, without oil we would still be living mostly like people were in the late 1800's early 1900's. Not saying that climate change/global warming/whatever new catchy term they will come up with next doesn't have some grit but with this a mayor of a city is trying to sue companies that provide a necessary product to humanity based on a very far out scientific theory. This is not his place to be doing that, hes taking tax dollars from his constituents and blowing it down the drain on lawyer fees to sue some of the biggest corporations in the world, he wont win. Plus money isn't gonna solve anything anyhow you cant just say hey look evil big oil just had to pay billions we'll grind it up and shoot it in the sky and all will be good. I'm a geologist and have read alot of things about climate change and I cant say one way or another whether its a real thing or not. Not at all the same case with Tobacco, it is proven to cause cancer and is honestly not the least bit essential for society and has done nothing to advance society.
  • Randy V on January 12 2018 said:
    David, respectfully, you seem to have a pre-determined agenda as you don't appear to be looking at the root of my commentary. For one, after two years of investigation the NY Attorney Generals probe has produced NO EVIDENCE that "Big Oil" had any definitive analysis of the effects of climate change, if you have been following in any detail the course of the "Exxon Knew" lawsuit. So, the facts (to date) don't seem to support your position or list of allegations. I don't see the relevance of "settlers" in my comments. What I am questioning is LONG before ANYONE was looking at climate change, many urban planners and scientists were questioning land use & development patterns in many areas. There is a consequence for choice. Simply put, to vilify a single industry when you have such a complex, multi-faceted and evolving challenge seems (to me) to be a disservice. I don't think the NY mayors contentions facilitate a healthy debate...One mans opinion.
  • raymond standring on January 12 2018 said:
    Mother nature will do what it wants to do regardless of what man does or says and nobody on this planet can prove me wrong IMHO.
  • Rod on January 12 2018 said:
    Since it was proven back in 1856, that humans have no affect on climate, I would say, "NO", oil companies should be given a medal for community service.
  • Jim Ponder on January 12 2018 said:
    Climate change, global warming -- whatever it's called these days -- is a brilliant scam. The weather gets hot, it's global warming. The weather gets cold, it's global warming. The weather is normal, it's global warming. The weather is strange, it's global warming. All these problems, of course, can be solved with other people's money -- lots and lots of money. Notice that when the "activists" sound the alarm, they call on everyone else to make the sacrifices and pay the tab for addressing the crisis. Meanwhile, the most ardent global warming advocates travel about the world on private jet aircraft shaming the rest of us for flying on Southwest to see our Aunt Mabel in Nashville for Christmas. DeBlasio is one of a growing class of deadbeats who need real jobs in the worst way.
  • Steve on January 12 2018 said:
    Yes, of course the oil industry should pay heavily. There is ample evidence they have known the effects of their product for a long time and have been financing PR to confuse the public and delay action. They are like drug dealers trying to put all responsibility on addicts they lie to and profit from. The amount that people use fossil fuels varies depending on the society and local/individual efforts to switch to alternatives, which again has been influenced by industry lobbying and PR; but it is irrelevant to industry culpability. If people are not off fossil fuels already, they are probably in transition or soon will be. Cheers.
  • Jim on January 12 2018 said:
    David "Assuming this is/can be proven without a doubt, then they are liable and comparing them to the Tobacco industry in the way information was obfuscated is justified."

    Which is why we should never "assume" anything. You premise, "proven without a doubt", is impossible to prove and easily disproved. The best scientists on the planet struggle daily with separating what is natural warming after the Little Ice Age and what is attributable to anthropogenic CO2 emissions.

    In the end Big Oil will not pay for climate change, the consumers will.
  • David on January 13 2018 said:
    Randy V, I'm sorry if my previous comment as well as this one are stress inducing but I did clearly state that Assuming Big Oil was proven to have purposefully misinformed the public on an issue that could potentially cause large scale devastation, they should be held accountable for their actions. I did not say that this Was proven. If their product has hidden leverages and potentially enormous secondary costs these should have been declared and a concrete discussion about alternatives should have been initiated immediately, not obfuscated for the enrichment of these companies and at the cost of public well being. There is at least some tentative evidence that the current refugee crisis is worsened by climate change and that conflicts can be further exacerbated by it. Climate change seems to be a crisis multiplayer on many fronts. Access to food, water and other basic necessities are a key factor for stability. If Climate Change damages access to these resources by destabilizing ecosystems for a major portion of the world's population, we are likely to see large scale revolts against governments and chaos will ensue, there is plenty of proof linking basic necessities to stability. Civil wars engulfing large parts of the world will inevitably also affect rich nations, plenty of evidence for this already. If the above is indeed the case, and further projections by many, many Climate Scientists become a reality, we can expect what we are seeing at the moment to be just the tip of the iceberg in terms of the chaos that might be coming our way. These projections are no mere fantasies and should be taken very seriously by all of us. Yet, I'm constantly hearing about all the comforts that we've had/have thanks to Big Oil. This seems to be like a case of buying with your visa without realizing that you own one and have no cash to reimburse your creditor, a creditor. Nature does not understand the concept of letting things slide.

    In my opinion, and in the current case as well as future cases against Big Oil, it is completely irrelevant whether people need the product in question, as far as proving any wrong doing on the part of Big Oil. If it is shown that they have willfully misinformed the public about potentially devastating effects their product can cause, which they were aware of through their own research and have repeatedly blocked meaningful action to address the issue their product is causing, then Big Oil is liable. If climate change projections become a reality in the coming decades and what I mentioned above is indeed our brave new world, then Big Oil will be dreaming of the good old days when people just wanted money as compensation. As I see it, we seem to be drifting towards the worst possible projections.

    Jarred, to answer your questions, I do not own a car and do my best to heat only when necessary. I've also chosen to use the most expensive available renewable energy mix for electricity and my yearly consumption is very low, especially compared to American averages. I could have purchased nuclear/oil energy which would have cost less but chose to pay instead. My suggestion to all of you is to limit your uses of hydrocarbons unless they are necessary. The world population needs to understand that until there's a concrete solution to the issue at hand, the days of splurging on whatever we feel like are over.
  • Porcupine on January 14 2018 said:
    No, they shouldn't. Climate has been changing since we started recording it. So called "man-caused global warming" is, IMO, just the latest attempt by government "elites" to tax businesses more and get more control over our individual lives. Is the climate changing? Yes. Is global warming going to cause TEOTAWKI? Well, no one knows but so far none of their dire predictions have come true. Remember in the 70's when the big scare was global cooling and "the coming ice age?" The alarmists have no proof that climate change is caused by burning fossil fuels. My question is, if big oil is what causes climate change, why was the climate already changing before the advent of big oil?

    Peace out,
    porcupine
  • paul on January 14 2018 said:
    This is the path that society chose to take. The only thing I see out of all of this is a broke city trying to make ends meet by suing whomever they can for a buck...
  • bradster on January 16 2018 said:
    Deforestation by man has probably done more damage to our environment than oil and for a much longer period. This is what we should really be focusing on to improve air/water quality, and land erosion, just for starters.
  • Paul on January 17 2018 said:
    Despite the presence of the evil parasitic humans on the surface of the mothership, satellite images show the planet has turned more green the past three decades, presumably due to better growing conditions. EVs are powered by electricity sourced from burning coal and natural gas and therefore, are not as environmentally friendly as depicted. Also, the cost of producing and disposing of the lithium batteries, which are a form hazardous waste, is also expensive. How is it expected that our power grid, already subject to rolling blackouts, will all of a sudden replace all the gasoline stations with electric power for transportation? Where will all this electricity come from? How many power plants will need to be built to convert to electric transportation?

    Rather than climate change, lets talk about climate engineering, a far more serious concern.
  • Marcus Rönningås on January 19 2018 said:
    As far as lawsuits - Big / Small companies involved in fossile fules will be held accountable for a certain %-age of global warming, and the consequences thereoff. It is a scientific fact that the increased emissions of green house gasses such as CO2 increases the temperature of the earth, hence affecting the climate.

    I think Steves comment above is right on target. But the amounts and how the settlements will look like ? That is anyones guess.

    The next question, can we migrate from fossile fuels ? Yes - absolutely and we can start today. I purchase COO's (Certificates Of Origin) from our electricity supplier and that costs me ~0,003 USD extra per kWh. We are leasing an Ioniq EV since last summer, which is the car we (almost) always drive - hence we have spent ~250 USD on gasoline for our other 2 cars in the last 1/2 year making the lease pay for itself.

    What has that got to do with the lawsuits ? Fossile fuel companies will not in the future legal negosiations be able to claim that they were the only alternative for society - because they were not !
  • rbblum on January 20 2018 said:
    Nothing really changes in a cyclical world . . . Eventually you run out of other people's money . . . Then capitalism (incorporating free will and free markets lubricated by a real currency backed by precious metals) will, once again, be understood, appreciated and embraced.
  • Jarjar thinks on January 25 2018 said:
    If big oil are to pay for greenhouse gas emissions then we should look at making large dairy and meat producing company's too, with a 14-18% contribution to ghg emissions.
  • Brad on February 08 2018 said:
    There's an axiom that the good mayor hasn't learned: Big Oil is caused by Big Consumption. But we can't very well expect the mayor to call out his own people for causing the problem. The "we just can't help ourselves" mentality applies to drug addiction, tobacco and alcohol abuse, and global warming. However, that cloud over NYC might also be the product of over eight million people eating ethnic food. So lets sue the Greeks, the Lebanese, the Thai's, the Chinese, and etc. Try for some consistency, Mr. Mayor. But consistency in the liberal mind is usually too much to hope for.

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