As Tim would tell you, we all know the climate is a changin’, as Dylan might have sung. There’s a huge push out there to do somein’ about it. Windmills and solar farms seem high on the list of priorities. But getting rid of those pesky fossil fuels and their emissions is way up there.
Virtue signalling you’re on board even though you’re a major extractor of said fossil fuels is how the PR guys and gals square the circle for the fossil fuel energy companies. So it’s no surprise to read this in the Financial Times:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]BP lobbied against US methane rules despite green public stance[/perfectpullquote]
Now we can argue the ol’ science and all that about what is driving climate change (or not, as it may be since some declare it’s settled science) but there’s a view that methane is a major contributor. So reducing the amount of methane out there in the atmosphere is seen as “a good thing” and worthy of support. Hence BP, you know that oil major with the nice green, white and yellow sunflower they use as their logo, has signalled they are “on board” with the idea of reducing methane emissions.
But what do we find? The FT article tells us:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]BP has lobbied intensively to weaken US rules on methane emissions even as the energy group cast itself as leading a campaign to cut the release of the potent greenhouse gas.[/perfectpullquote]
Now what a surprise. Energy company in the business of extracting natural gas—read methane—is not keen on “rules” that govern its extraction.
Who would have thought?
You could have knocked us over with a fig leaf. Really. But perhaps economists are true to being cynical ol’ folk living in a pit with ne’er a good word for the world outside. But we’re not at all surprised by what BP—and the other energy firms—are doing. We’re just surprised that anyone could be surprised by this apparent hypocrisy.
In that branch of economics called game theory, there’s a cute little idea called cheap talk. No, not the kind you do at the bar when chatting up the blonde by your side, but the idea that you can jawbone people into believing something merely by talking about it.
Sounds like BP doesn’t it—and the other oil majors, if one’s honest.
The simple fact is, as the article indicates, is that accepting the new rules—and we’re talking 2015 here under the Obama administration and a green activist EPA—would be very costly and labour intensive. That is, the new rules would significantly raise the cost of extraction. Not something an oil major really wants to see happen.
Economists talk about revealed preferences (something Tim will wax lyrical about at the bar, given half a chance—possibly to that blonde). We can simply say, there’s a big difference between the talk people talk and the walk people walk. BP may talk the language of going green and even choose a nice green sunflower as their logo but the simple truth is that the core business relies on hydrocarbon extraction and until that changes they’re going to want to keep the process as cheap and efficient as possible.
To think otherwise is to not understand how a business operates.