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Oil companies that caused climate change now fear its financial impacts

June 12, 2012 | 3:24 pm | , Research Director and Rapid Response Manager

© 2008 flickr/Libelul cc by 2.0

We all know oil companies make an amazing amount of money ($33.5 billion in 2012 first quarter profits by the Big Five alone) selling gasoline and other petroleum products to the world. The U.S. government gives billions of our tax dollars back to these companies every year. The oil companies spend big to keep the system running this way.

Not a bad system, if you’re a huge fossil fuel corporation. Unfortunately, the oil companies make a product that warms our planet and disrupts our climate, which affects all of us. So what does the fossil fuel industry do? They fund organizations and people that make the case for denial and inaction. So this is an industry that profits from products that science shows will change the climate, then spends money on cover-up.

Actually, though, it gets even stranger. When it comes to protecting their profits, oil companies explicitly acknowledge that climate change poses a threat to their bottom line.

© 2011 flickr/Bob Joe Smit

ExxonMobil tells its investors that “rising greenhouse gas emissions pose risks to society and ecosystems that could be significant.” Chevron says on its website: “[T]he use of fossil fuels to meet the world’s energy needs is a contributor to an increase in greenhouse gases … There is a widespread view that this increase is leading to climate change, with adverse effects on the environment.” ConocoPhillips goes further: “ConocoPhillips recognizes that human activity, including the burning of fossil fuels, is contributing to increased concentrations of greenhouse gases in the atmosphere that can lead to adverse changes in global climate.” BP even cites the Intergovernmental Panel on Climate Change on its website. And Shell urges that “CO2 emissions must be reduced to avoid serious climate change.”

But talk is cheap. Are they doing anything concrete to suggest this isn’t just hot air?

They do when it affects their bottom line. IBM’s Carbon Disclosure Project Report said that “ExxonMobil noted that the company’s ‘operations around the world include remote and offshore areas that present challenges from existing climate extremes and storms. These severe weather events may disrupt supplies or interrupt the operations of ExxonMobil facilities.’” So according to Exxon, climate change could disrupt their business model. It’s easy to see through the rhetoric when giant fossil fuel companies financially react to the risk of disruption and damage from climate change.

One example is Louisiana’s Highway 1, which “connects critical oil and gas resources in booming Port Fourchon to the rest of the nation” and may influence the distribution of up to 18% of U.S. oil and gas supply. It’s crucial to the future success of the fossil fuel industry. The only problem is that it’s sinking. And increasing storm surges due to climate change threaten to cut off access to the port. So who’s stepping in to save LA-1? The LA-1 Coalition, which says “If LA 1 were to be rendered inserviceable due to high water, even for just a few days, this nation’s energy supply would be crippled.” Funders of the LA-1 Coalition include: BP, Chevron, Entergy, Halliburton, Anadarko Petroleum, ConocoPhillips, Marathon Oil, Murphy Oil, Shell, and ExxonMobil. All of these companies are putting their money where the science is – science that says climate change increases the risk of storm surges knocking out a road critical to their bottom line.

As Entergy’s director of climate consulting said, “Clearly we are facing risks from sea level rise, more intense storms, flooding and surge damage.” The company is spending $73.5 million moving and strengthening transmission and distribution lines serving Port Fourchon, Louisiana. Climate Central released a map showing that 328 energy facilities in the U.S. are less than 5 feet above local high tide.

BP is also taking projections about climate impacts beyond the rhetoric on its webpage. Last year, ClimateWire reported: “[BP] has altered the design of oil-drilling platforms in the North Sea to accommodate projected sea level rise and it has improved coastal defenses at its Northstar field in Alaska, where receding sea ice has left shores more vulnerable to erosion from crashing waves” (subscription only). In its 2011 Sustainability Review, BP talks specifics on how it’s adapting to climate change impacts: “…we adapt drainage design practices based on the anticipated frequency and severity of storms.” So the product that causes climate change is also causing the seas to rise, ice to melt, and storms to strengthen. You’re not going to see that on their next TV commercial.

What about the Trans-Alaska oil pipeline? The permafrost on which most of it was built is thawing faster than anticipated, so the supports have to be upgraded. The repair work won’t come cheap. Gunter Weller of the Institute for Arctic Research at the University of Alaska, Fairbanks says “[t]hat increases the price of your gasoline.”

A recent Senate hearing discussed the risks sea level rise and storm surge pose to coastal energy facilities. It’s the elephant in the room. The fossil fuel companies aren’t trying to do what they say needs to be done to solve climate change. Instead, they’re preparing for its impacts, with profits gained from our pockets.

So the next time you pass a gas station, ask why climate change is serious enough for oil companies to spend money preparing for it, but not serious enough to call for a rapid transition to renewable, sustainable energy.

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