Tuesday, December 1, 2020

Climate Change in the Oil Industry


Emily Levesque
Climate Change In the Oil Industry


Oil is one of the United States’ largest energy sources. It’s used for many things in our day to day life, such as to run cars, generators, airplanes, and even our homes. By the end of 2019, the United States had used roughly 68% of petroleum oil on transportation, as gasoline is the most consumed oil product. Distillate fuel, also known as diesel, is the second most used petroleum product, as this is used in many pieces of equipment, heating, and electricity. Gasoline averaged around 391 million gallons per day, whereas distillate fuel averaged around 172 million gallons per day. Compared to the rest of the world, the United States is the biggest consumer, consuming 20.2% of the world’s petroleum. In comparison, the second largest consumer is China, with a much smaller 13.7%. The U.S. Energy Information Administration predicts that liquid oil, such as gasoline or petroleum, will account for about 35% of total United States energy consumption by 2050, especially since liquid oil is used by the majority of the transportation industry (Energy Information Administration).

         According to National Geographic, “Natural gas is a fossil fuel formed from the remains of plants and animals. Other fossil fuels include oil and coal.” Fossil fuels are formed underground, covered in layers of layers of decomposed organisms, soil, and sediment. As these layers continue to grow, the soil becomes extremely tight and compressed, becoming hotter and deeper as it collects. This compression and temperature difference make carbon bonds break down, producing methane, or natural gas. This is collected by drilling straight down from the surface of the Earth. Practices such as hydraulic fracturing – also known as fracking -  splits open rock formations high pressure water, chemical, or sand streams. This is extremely harmful to the environment, as it requires an enormous amount of materials. Water gets pulled not only from habitats, but also from an area’s water table, which is also known as the water level. When water level decreases, wells streams and lakes can dry or reduce, and water quality can be diminished (USGS). This process can also produce very toxic water that can leak into water sources used by society. Fracking also causes micro-earthquakes, and although they are very tiny, they can cause damage to buildings and pipelines (National Geographic). Oil spills are also a massive threat, as it’s almost impossible to fully clean. When spilled into aquatic areas, it’s difficult to retrieve over 20% of the oil spilled. Oil companies are quick to drill in places such as the Arctic, and the harsh environment makes it more difficult to clean up any mistakes (Greenpeace USA). 



         The oil and gas industry had brought a lot of good things to American economy and life, but one overwhelming threat of their practices is climate change. “On public lands along, oil and gas development are set to generate a massive amount of climate emissions. Federal lands leased to the industry in the last three years could produce as much as 5.9 billion metric tonnes of greenhouse gasses. That’s more than half the emissions that China – the world’s largest emitter – releases per year (The Wilderness Society).” Burning oil releases carbon dioxide, essentially causing the greenhouse effect. The greenhouse effect is when thermal energy is released into the atmosphere, which warms the planet in turn – refer to figure below.  When the planet warms, ice melts faster in the Artic, sea levels rise, and animals migrate to different environments (BBC News). As of 2013, petroleum oil made up 41% of the United States’ carbon dioxide emissions. Yet, despite the clean resources we have available to us, companies try harder and harder to keep oil in such high demand. “Oil companies pour millions of dollars into political campaigns, propaganda, and lobbying so that they can delay the process on renewable energy and ensure their own profits. In 2014, the oil and gas industry spent a total of $142 million lobbying the U.S. government.” It is also to note that former CEO of ExxonMobil, Rex Tillerson, was selected as former Secretary of State (Greenpeace).


         ExxonMobil is known as the world’s largest public oil company, as well as the third largest company in the world. The company has been in business since 1892, following the Standard Oil trust. The Standard Oil Company and Trust was founded under John Rockefeller between the years 1870 and 1911 and had controlled the majority of all oil excursions – this could also be called a monopoly. Under the Standard Oil trust, companies in the oil industry could essentially be controlled. This trust was soon diminished in a few years but became known as a holding company (Britannica 2). In short, a holding company is “a corporation that owns enough voting stock in one or more other companies to exercise control over them (Britannica 1).” In 1911 the Supreme Court ordered the trust to split into thirty-three branches. The New Jersey branch of Standard Oil was renamed to Exxon Corporation in the year 1972, becoming one of the only branches to become a multinational company. They began to work in “natural gas, coal, nuclear fuels, chemicals, and mineral ores such as copper, lead, and zinc (Britannica 3).” The company has worked in climate research for almost four decades since then, resulting in almost 150 public papers, 50 peer-reviewed papers, and 300 patents for technological advances in emissions reductions. They’ve invested $10 billion to developing lower-emission energy solutions in the past twenty years, going to enabling research and reducing emissions. Vice President of Public and Government Affairs, Suzanne McCarron, said, “ExxonMobil will continue to focus our efforts on providing the energy the world needs, while simultaneously addressing the risk of climate change by reducing our emissions, helping consumers reduce theirs, and advancing research to find new low-emissions technologies for the future.” Their climate change risk management strategy is developing innovative products and technology, managing climate change risks, engaging on climate change policy, and managing impacts on air and water (McCarron).

         ExxonMobil supported the growth of climate change research through the 1980s, but suddenly stopped their activism come 1990. The company’s manager of science and strategy and development in 1989 acknowledged that gases released by burning fossil fuels raise global temperatures significantly. “Lawmakers at home and abroad began calling for reductions in carbon dioxide emissions from fossil fuels — the lifeblood of Exxon’s business. And, in 1988, the United Nations established a panel of scientists to study the issue and make policy recommendations.” The company grew concerned about government policy, and soon companies began to develop alternatives to CFCs, or chlorofluorocarbons, which erode the ozone layer. In order to try to prevent these forming regulations, Exxon began to try to bring doubt to the public, claiming that more research was needed and that the cost of reducing these emissions were great. In 1992, they joined the Global Climate Coalition, an association of fossil fuel companies who fought these climate change regulations. They contributed almost $16 million to raise questions about climate change between 1998 and 2005, yet other sources say they spent $30 million. In 1997, the United States refused to ratify a United Nations treaty that would reduce greenhouse gasses because it would be harmful to the economy. In 2007, ExxonMobil publicly said that climate change was real and that burning fossil fuels was a huge contributor (Los Angeles Times). Many states from all over the country are suing oil companies they find responsible for damage caused by climate change, mainly for increasing air temperatures and rising sea levels. These not only cause flooding, but also forest fires that we’ve seen for the past few years in California. Connecticut has sued ExxonMobil, who is the nation’s largest oil and gas company. According to the attorney general, William Tong, this caused Connecticut to be unprepared for rising sea-level and storms. The oil industry says that it’s unrealistic to blame one industry for a worldwide problem such as global warming. Delaware claimed that 31 fossil fuel firms failed to warn the state of the hazards of their products. The city of Charleston in South Carolina has filed a climate lawsuit against big oil companies, saying that they should help with repairing flood damage. “I handled their products, and I can tell you from firsthand experience that these companies were not in any way, shape or form sharing information with us about the dangerous flooding and extreme weather their products would cause,” said Mayor John Tecklenburg. Spokesman Casey Norton of ExxonMobil said, “The claims are baseless and without merit. We look forward to defending the company in court.” A 2015 lawsuit was dismissed from two dozen younger people looking for the US to take more action to stop emissions (Grandoni).

The State of New York tried to show that ExxonMobil lied to investors by keeping two separate books for estimating the cost of complying with climate regulations. “ExxonMobil does not dispute either that its operations produce greenhouse gases or that greenhouse gases contribute to climate change. But ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case,” said Ostrager, a New York Supreme Court judge. It was said that the NY attorney general didn’t produce any investor who was harmed and failed to show that any were misled. Massachusetts has also sued Exxon for “deceptive advertising to Massachusetts consumers and for misleading Massachusetts investors about the risks to Exxon’s business posed by fossil fuel-driven climate change – including systemic financial risk.” Other governments such as Rhode Island, San Francisco, and California are looking for compensation from oil companies for the damage rising temperatures brought to farmers and beachfront businesses, saying that they’ve created a public nuisance. Occurred in October 2018, settled in December 2019 (Grandoni and Mufson). Two states over the last few years have also begun fraud investigations into Exxon due to climate change. In addition, nine cities and counties have also sued major oil companies for climate change compensation. “The industry has profited from the manufacture of fossil fuels but has not had to absorb the economic costs of the consequences,” said Harold Koh, professor of law at Yale who served as legal advisor to former Secretary of State Hillary Clinton (Hasemver). Below is a timeline documenting these events.


         The stakeholders involved in this case include ExxonMobil executives such as CEO Darren Woods, Vice President Neil Chapman, and PFO Andrew Swiger (ExxonMobil). Investors are involved as well, as they are the center of the New York lawsuit, having been told incorrect information about how the company dealt with climate regulations. Most importantly, stakeholders also include not only Americans, but also the entire world as this is a climate change matter. In terms of collecting oil, those most affected would be people living in coastal areas as well as those affected by flooding and major storms. These people are all important as they were either directly or indirectly affected by the decisions of ExxonMobil, and they should therefore be considered in all court proceedings.

                Individualists look for the best possible option for long-term, self-interest. An individualist will agree with ExxonMobil, as they are working for a profit – whether or not the public agrees with their methods or not. What they had done was legal (as decided as of the most recent New York Supreme Court decision at the end of 2019), although heavily frowned upon as they were deemed “deceptive” by many state and city governments in the United States. Therefore, an individualist would argue that ExxonMobil was ethical.

         Utilitarianism is the idea that happiness should be maximized from every party involved. I think a Utilitarian would disagree with ExxonMobil in this case, as they didn’t consider investors or the general public. By the company withholding information regarding climate regulations, they are threatening not only the environment, but also the people they are supposed to provide for. Unfortunately, they are not looking for the best of all in this scenario. A utilitarian would consider ExxonMobil to be unethical.

         Kantianism asks that the company not only considers themselves, but also others. They expect companies to not consider themselves exempt from the rules, and that all people should be respected. A Kantian would consider ExxonMobil to be unethical as they are not respecting the environment or those affected. When they had publicly acknowledged climate change, it was due to public outcry and concern rather than their own morals. This is against the Formula of Humanity, which states that humanity should not be treated as a means and always should be treated as an end.

         The virtue theory looks for the proper morals of a decision. It calls you to be honest and generous as well as foster virtuous practices. It calls for self-growth and justice, and that all should be cared for and nurtured. I think someone who followed the virtue theory would see ExxonMobil’s case as unethical, as they weren’t looking for justice for communities affected by their own doing (IEP).

         In my own justified opinion, I believe ExxonMobil understands what they’re doing but refuse to properly acknowledge it, as oil is an enormous industry in the United States. Obviously, many states and major cities agree with this sentiment, and are looking for changes in the industry as a whole. In the 1980s they were supporters of climate change, and avidly agreed that oil was a large contributor to the overall problem. Soon after they changed their stance completely, which was seen by them actively trying to dismiss claims and discredit information. Their effort to discredit scientists grew so evident, that they spent around $16 million, which isn’t a small feat. I understand that oil is a very large industry and will take a very long time to dismantle or fully understand, but I agree with the states’ and their efforts to decrease the damages done. As there is so much money in oil and these companies in general, I do think it’s possible to shift their focus from things life fracking to cleaner energy sources, such as solar, wind, or water. These options are not only more sustainable than fossil fuels, but the cost of clean energy is also significantly lower. The wind energy market is also growing in the United States, which will help to “cut carbon pollution, diversify our energy economy and bring the next generation of American-made clean energy technologies to market.” Water is also a new market that has been vaguely explored, but energy would be created from waves, currents, and tides (Energy). Not only would the oil industry begin to shift to cleaner, less destructive kinds of energy, but they would also most likely earn a profit on these untapped sources.

         The company, ExxonMobil, should properly address these nationwide lawsuits and show their grievances. The people are disappointed in not only the company, but also the industry as a whole, and it’ll be a long and hard journey to redemption. First, they need to properly acknowledge climate change and how they’ve contributed to the growing issue. I also think government officials should remain neutral to their own personal ties to these companies, as that’s why the United States refused to ratify a United Nations treaty that would in turn reduce greenhouse gasses – it would’ve been harmful to the economy. Once this has happened, ExxonMobil could shift their focus to other kinds of energy. That way, they won’t have to use harmful methods to acquire these fossil fuels and can take part in a growing industry. It may take a large amount of money to start this process, but clean energy would take a lot less money to maintain than would be needed for digging for oil deep underground. This change can result in profits, as more and more car dealers are making and selling electric cars. It’s predicted that by 2040, half of vehicles on the road will be electric, and the other half will be run by fossil fuels (Reuters). That takes fossil fuels out of the transportation industry by almost half, which would already cut their future profits by a significant amount. By creating a plan to make these adjustments, I think ExxonMobil can successfully replenish their reputation while making a profit.






















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