The hearing confirmed what we already know: oil companies produce energy and progressive politicians produce kangaroo courts.
As explained in the subcommittee’s briefing memo, the hearing purports to examine how Big Oil prevents the public from hearing “the truth” about climate change. It’s a bit much. Anyone who watches the TV news, reads the papers, listens to talk radio, or uses the Internet cannot easily avoid the parade of politicians, pundits, agency officials, academics, and cultural icons who preach the horrors of climate change. That’s been so for more than twenty years.
In contrast, oil industry spokesmen addressing climate change are few and far between. The only recent example I can recall is former ExxonMobil CEO Rex Tillerson endorsing a carbon tax and the Paris Climate Agreement.
Verging on self-parody, the briefing memo suggests that unless Democrats take back “our democracy” from Big Oil, the world is going to end and people of color will suffer most. Predictably, the memo ignores the more serious side of the risk equation. Lower-income households will suffer most from the energy price shocks and economic fallout of climate policies like the Green New Deal.
The memo claims “decades of climate denialism by the oil industry forestalled meaningful government action to avert the current crisis.” Well, progressives habitually blame others when they can’t persuade the public to support hard-left policies. Factors far more fundamental than oil industry lobbying thwart progressive ambitions: the abysmal disproportion between the costs and benefits of so-called climate solutions, the amazing progress in human well-being during the age of global warming, and ordinary people’s healthy skepticism about coercive agendas of social transformation.
What Did Exxon Know?
Claims that “Exxon knew” way back in the 1970s how climate change would wreck the planet is the worst sort of revisionism. Two decades later, in the early 1990s, the United Nations Intergovernmental Panel on Climate Change (IPCC) was still unsure whether anthropogenic global warming was even happening. The IPCC’s First Assessment Report, published in 1990, stated: “The size of the warming is broadly consistent with predictions of climate models, but it is also of the same magnitude as natural variability. Thus the observed increase could be largely due to this natural variability….The unequivocal detection of the enhanced greenhouse effect is not likely for a decade or more.” The IPCC’s Second Assessment Report, published in November 1995, famously concluded: The “balance of evidence suggests that there is a discernible human influence on global climate.” That iconic formulation was not an assertion of what is demonstrably true, only an assessment of what the “balance of evidence” “suggests.”
Here’s what actually happened. In the 1970s and 1980s, Exxon Mobil closely monitored and contributed to climate change science. The “consensus” then, as now, was based on climate models with rather large acknowledged uncertainties. Some Exxon scientists worried about worst-case scenarios. What Exxon “knew” in those decades was not the state of the climate but the state of climate modeling. As David Middleton sardonically put it, “Way back in 1982, Exxon knew what [NASA scientist James] Hansen knew [in 1988]. They knew that CO2 would cause nearly twice as much warming as would actually transpire over the subsequent 30 years.”
Even today, the evidence of a climate “crisis” is weak. The Fourth National Climate Assessment is a prime case in point. The New York Times and The Washington Post headlined the Assessment’s claim that unchecked climate change could increase global temperatures by 8°C and lop 10 percent off U.S. GDP in the 2090s. To get that result, the U.S. Global Change Research Program ran an inflated emission scenario through an ensemble of overheated climate models. The scenario, called RCP8.5, bizarrely assumes that coal scales up rapidly to become the world’s dominant energy source in 2100, providing nearly half of global energy—a percentage not seen since 1940. That is wildly implausible.
To estimate the impacts of RCP8.5, the Assessment used a model ensemble called CMIP5 that projects on average about twice as much warming in the global lower atmosphere as has occurred during the past 40 years.
Even with that biased combo, the 8°C projection occurs in only 1 percent of model runs—a point not mentioned in the National Climate Assessment.
Nor does the Assessment mention that even if climate change reduces U.S. GDP by 10 percent in the 2090s, U.S. per capita GDP is still expected to be much larger than today.
In short, claims that Exxon knew how terrible its business model was for the world back in the 1970s are absurd, since “we” don’t know it even today. Just about every indicator of human well-being—life expectancy, per capita income, crop yields, malaria infection rates, access to safe drinking water, and vulnerability to extreme weather—has improved dramatically as global fossil fuel consumption increased. Try finding the “climate crisis” or “greenhouse fingerprint” in the chart below.
Shareholder Value Con
Some climate campaigners claim Exxon imperils “shareholder value” by hiding climate change risks from the public, which in turn hides climate policy risks from its investors. More silliness—as if Exxon stockholders don’t know that a large and angry movement is keen to plunder and destroy their company.
A related accusation is that Exxon fails to take climate policy risk into account when planning the company’s investments. After sifting through millions of pages of ExxonMobil documents, former New York Attorney General Eric Schneiderman learned to his chagrin that the company stress tests its investments under an aggressive scenario in which the world’s governments adopt climate mitigation policies equivalent to a carbon tax reaching $60 per ton in 2030 and $80 per ton in 2040.
However, Schneiderman’s successor, New York Attorney General Letitia James, alleges that ExxonMobil secretly used a lower set of carbon prices rather than the “publicly-disclosed higher prices,” The New York Times reports. Thus, according to the New York attorney general’s complaint, “Exxon Mobil made its assets appear significantly more secure than they really were, which had a material impact on its share price.” ExxonMobil attorney Ted Wells, Jr. “called the company’s procedures ‘robust,’ and accused the attorney general’s office of engaging in a politically motivated effort to ‘vilify’ the company with lies,” the Times reports. The trial began Tuesday. Today’s House Oversight Subcommittee hearing is obviously timed to generate unfavorable PR for ExxonMobil as the trial proceeds.
Whatever the outcome of that case, attacking oil companies in the name of “shareholder value” is like saying you want to bomb a village in order to save it. Shareholder activists are among the most vociferous proponents of the “keep it in the ground” policies creating the financial risks they demand Exxon and other oil companies divulge. They agitate for a carbon-constrained world and then demand the companies confess their unsustainability in that world. Such confessions would tend to scare away investors and depress stock values. In addition, the confessions would set the stage for litigation claiming the companies defrauded investors by waiting until compelled to disclose climate-related financial risks. Such litigation would also tend to spur capital flight and hammer stock prices. Thus, the point of the shareholder value campaign is to destroy shareholder value. It’s a con.
Hoist on Their Own Petards
Fortunately, the Exxon bashers can easily be hoist on their own petards. Hyping climate risk is the modus operandi of countless progressive politicians, regulatory bureaucrats, environmental activists, and alternative energy lobbyists, and many have gotten powerful, rich, or famous in the process. If minimizing climate risk for personal gain is prosecutable fraud, as “Exxon Knew” campaigners contend, then exaggerating climate risk for gain is equally unlawful. Sauce for the goose is sauce for the gander.
Similarly, if minimizing climate risk is a punishable offense, so is denying the risks of climate policy. Such risks include higher energy costs, slower GDP growth, and lower household incomes; more special-interest rent seeking, more unauthorized bureaucratic lawmaking, and more treaty-like arrangements to make U.S. energy policy less accountable to voters and more responsive to foreign leaders, multilateral bureaucrats, and international non-governmental organizations.
Worst of all, assuming “consensus” climatology (the CMIP5 models + RCP8.5), the Paris climate treaty’s warming mitigation goals cannot be achieved unless developing countries dramatically restrict their current consumption of fossil fuels. Imposing such restrictions on countries where nearly 1 billion people still have no access to electricity would be a humanitarian disaster. The idea that “we” can put energy-starved portions of the world on an energy diet without anyone getting hurt—except some fat cat oil CEOs—is about as fraudulent as it gets.
To avoid possible misunderstanding, the point of skewering Exxon bashers with their own legal theory is not to hit them with a RICO investigation, which would only further criminalize policy differences. Rather, the point is to deflate their sanctimony and make them stop attacking free speech. The objective is to make them acknowledge that the First Amendment protects all political speech—even politically incorrect speech about climate change.
Is Exxon Liable for Climate Damages?
The briefing memo blames Exxon for the “escalating magnitude of hurricanes” and the associated damages. That is much harder to demonstrate than the subcommittee leaders imagine. Substantial data indicate there has been no long-term trend in global hurricane power, and none in hurricane-related U.S. economic damages once disaster costs have been adjusted for changes in population, wealth, and the consumer price index.
So far, climate tort litigation against oil companies has failed. In June 2018, U.S. District Court Judge William Alsup dismissed Oakland and San Francisco’s litigation against Exxon Mobil on several grounds. One is simply that plaintiffs, like humanity in general, have benefited from fossil energy, and oil companies wouldn’t provide such products absent consumer demand. Alsup noted that “defendants stand accused, not for their own emissions of greenhouse gases, but for their sale of fossil fuels to those who eventually burn the fuel.” Implication: “If an oil producer cannot be sued under the federal common law for their own emissions [per American Electric Power v. Connecticut (2011) and Krivalina v. Exxon (2012)], a fortiori they cannot be sued for someone else’s.”
A month later, U.S. District Judge John Keenan made a similar point when dismissing New York City’s lawsuit against Exxon and other oil companies. The city’s attempt to apply common law concepts of nuisance and trespass to greenhouse gases suggests that defendants’ products or the associated emissions create an “unlawful invasion” of city property. That makes little sense because “the City benefits from and participates in the use of fossil fuels as a source of power, and has done so for many decades.”
The hearing provided subcommittee leaders with a platform to virtue signal, rile up their base, frighten the children, and vilify energy producers. Not pretty. However, wild horses could not keep me from watching.
The sole minority witness was Mandy Gunasekara, Founder and President of the Energy 45 Fund, a non-profit educational organization “dedicated to informing the public about the environmental and economic gains made under the Trump Administration.” She more than held her own against five “Exxon Knew” campaigners. The hearing addressed a major issue of the 2020 elections: Should the U.S. government continue to pursue an agenda of market-driven U.S. energy dominance, or should it pursue an agenda of politically mandated deep decarbonization?