Traveling through the Middle East this week, I heard unprecedented pessimism from colleagues in government and the private sector about the health of economies that are mostly dependent on the flaccid price of oil. In Bahrain, for instance, construction cranes still punctuate the dusty skyline, but headlines are dominated by budget cuts and layoffs. To be sure, the world will continue to consume vast quantities of oil for the foreseeable future, including by the Formula 1 race cars that roared into the island kingdom this week, but is there something in the wind to suggest the real price is far higher - - and that we might soon be paying it?
Private plaintiffs and government attorneys have sued tobacco companies for decades, holding them accountable for the harms their products caused and for the deceptive smoke they blew in the faces of health officials and consumers alike. The result was billions of dollars of settlements and judgments, which caused the price of cigarettes to rise exponentially to cover those added costs. In 1970, a pack of smokes cost 38 cents. By 2014, it had risen to more than six bucks. Inflation alone would have raised the cost to only about $2 and change, so most of that bump was the cost of accountability.
So what does this have to do with the price of oil and fuels? California’s Senate Bill 1161, called “The Climate Science Truth & Accountability Act,” would allow state and local governments - - and private citizens who believe they have been harmed, including shareholders of oil companies - - to sue those companies for tobacco style deception about the dangers of their products. It would cover actions as far back as thirty years, potentially creating billions of dollars of liability.
Companies like Exxon/Mobil are already being investigated by New York’s Attorney General, who has demanded documents related to corporate-funded climate change research. Attorneys general in California, Massachusetts, and the Virgin Islands have launched similar investigations.
Then add the Securities and Exchange Commission, which recently ruled that shareholders may file resolutions demanding oil giants ExxonMobil and Chevron return capital to shareholders before it’s too late. Citigroup estimated that up to 40 percent of today’s investments in oil resources would qualify as “stranded” as long as oil remains under $75/barrel.
Let’s be clear about one thing - - these initiatives are not meant purely to be punitive. Our survival on this planet is at stake. Since 2009, scientists have been studying the carrying capacity of the planet and found we are at, or near, passing several tipping points, meaning we won’t be able to sustain future populations of plants, animals or humans. “We can no longer, for instance, attempt to solve one problem – such as biodiversity – without considering other issues such as food production or climate change,” the scientists have warned. In short, our fossil fueled joyride is threatening our food and water supply, something a planet with a rapidly growing population can ill-afford.
And speaking of petroleum powered joyrides, much talk at the Bahrain racetrack has focused on what that sport is doing to go green. In 2010, F1 announced goals to cut its carbon footprint, which appear to have succeeded - - a 24% reduction of emissions thanks to things like improved fuel economy and energy-capture braking. In fact, that may be the biggest contribution of motor sports to sustainability. The major automakers have learned from racing, transferring technology to everyday cars including hybrid engines, lighter materials, and more efficient tires. When applied to millions of cars on the road today, these technologies have likely saved millions of gallons of fuel and tons of emissions that would otherwise have been pumped into the atmosphere.
Don’t get me wrong - - I hope motor sports one day are powered by clean fuels and electric motors, but in the meantime, we should prepare for the cost of our transportation fuels, wherever we might use them, to race to new highs in the very near future.