Why Big Oil should be nationalized

During the 2008 financial crisis, the federal government protected the economy by bailing out companies it deemed “too big to fail”. Normally, the government protects the economy from companies that are too big to exist. Firms that prevent competition by dominating an industry are called monopolies. The Department of Justice or the Federal Trade Commission use federal anti-trust laws to dissolve them.

But what should the government do about corporations that use deception to dominate a market to the detriment of the economy and the long-term well-being of the American people? What should he do when an industry repeatedly violates public trust?

In other words, what are we going to do with the oil industry? By concealing its knowledge that its products are destabilizing the climate, funding a denial campaign and pressuring Congress not to tackle global warming, the big oil companies should have lost their social license to operate. since a long time.

Instead, he has used his influence and money to support billions of dollars in annual taxpayer subsidies (nearly $6 trillion for fossil fuels in 2020) and low-rate permits to extract oil and gas. gas from public lands. For years, these practices have suppressed the ability of clean substitutes like solar and wind power to compete. More recently, industry has opposed carbon pricing, which would correct market signals by better reflecting the true social and environmental costs of carbon fuels.

The American people also sustain industry by sacrificing their health to air pollution, suffering economic recessions triggered by oil price spikes, and losing the services of degraded or destroyed ecosystems. These “subsidies” cost more than $635 billion a year, according to the International Monetary Fund (IMF).

To discourage Congress from supporting President Biden’s climate action agenda, the six largest oil and gas companies spent nearly $120 million on 746 lobbyists last year, according to Taxpayers for Common Sense. By April, they had spent nearly $50 million in campaign contributions to candidates in this year’s election. To boost their image anyway, oil companies spent $10 million on Facebook ads in 2020. The top five companies spent $36 billion promoting themselves from 1986 to 2015, culminating when Congress nearly passed a bill. carbon pricing bill in 2010.

The International Energy Agency says the global path to net zero carbon by 2050 does not include new oil and gas fields or coal mines beyond those already committed to last year . Nonetheless, the industry is planning dozens of new oil and gas projects that would push global carbon emissions beyond the limits of the Paris climate accord..

Clear and present damage

According to the U.S. Energy Information Administration, if current energy policies continue, fossil fuels will still dominate the U.S. energy mix in 2050, crude oil production will hit record highs, and natural gas exports will drive production of this combustible. The cost to the nation would be $2 trillion per year by 2100, according to the White House Office of Management and Budget (OMB). Climate-related weather disasters in the United States have already cost $765 billion over the past five years, including $145 billion last year.

Big Oil expressed concern. In 2021, 12 of the world’s largest oil and gas companies have committed to achieving “net zero emissions” in their operations. However, the research quickly revealed that “the scale of industry investment and action does not match the rhetoric” and “the accusations of greenwashing seem well-founded”.

What should the federal government do? First, it should recognize that the fastest and most effective way to stabilize the climate is to not waste more time trying to decarbonize carbon fuels; instead, it should facilitate the transition to truly clean and renewable energy.

Second, it should fix the US energy market by eliminating policies that distort price signals. With prices that accurately reflect full life cycle benefits and costs, renewable resources would grow faster because they are free, inexhaustible, ubiquitous and naturally clean.

Third and most important, the government should nationalize Big Oil. This would allow the government to manage industry withdrawal, a process the private sector ignores. A coalition of climate action groups has shown that the world’s 60 largest banks have funded nearly $4 trillion in fossil fuel projects over the past five years, investments that could be blocked and lead to more taxpayer-demanded bailouts when the carbon bubble bursts.

“If there was ever an industry worth nationalizing, it’s the fossil fuel industry,” writes columnist and podcaster Thom Harman. A significant number of analysts agree.

What is nationalization?

A government nationalizes an industry when it takes control and manages it. The US government has done this on several occasions, including in 1989 to rescue the savings and loan sector and in 2008 when it bailed out banks, investment firms and insurers.

“The United States has a long and rich tradition of nationalizing private companies, especially in times of economic and social crisis,” notes researcher Thomas Hanna. Since World War I, the federal government has nationalized railroads, telegraph and telephone networks, arms manufacturing, gold markets, military aircraft production, coal mines, steel mills, airport security, mortgage companies, car manufacturers, the production of other raw materials, and even more than a dozen foreign companies.

“We will probably have to pick up the slack and dismantle the big fossil fuel extraction corporations that are both a major cause of climate change and one of the major institutional hurdles to overcome,” Hanna concludes.

In one scenario, the federal government could buy a majority stake in the three most dominant oil companies, ExxonMobil, Chevron and Conoco. The cost would be around $350 billion, an insignificant amount compared to unmitigated climate change or the $5 trillion the government has spent on COVID-19 relief, on the country’s defense budget this year. ($778 billion) or the $630.5 billion annual damage from fossil fuels to public health and the environment.

The federal government usually nationalizes companies to save them. If so, he must nationalize Big Oil to save us all from a future we don’t want.

William S. Becker is a former Central Regional Director for the U.S. Department of Energy who administered energy efficiency and renewable energy technology programs, and he also served as Special Assistant to the Department’s Assistant Secretary for Energy Efficiency and Renewable Energy renewable. Becker is also executive director of the Presidential Climate Action Project, a nonpartisan initiative founded in 2007 that works with national thought leaders to develop recommendations for the White House as well as House and Senate committees on climate policy and energy. The project is not affiliated with the White House.

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