Big Oil Has Never Been Cheaper, Lets Buy It
August 17, 2017 11:26 AM Subscribe
So, you want to nationalize the US oil industry? Bill Humphrey and Nate at Arsenal For Democracy provide a beginner's guide to a pragmatic government purchase of the US oil and gas industry to wind-down fossil fuel production rapidly in the global public interest (Audio, 51:00) Notes, outline, and sources. (PFD)
The fifth amendment would require that any seizure (1) be for a public purpose; and (2) be accompanied by the payment of fair market value.
posted by jpe at 12:34 PM on August 17, 2017 [6 favorites]
posted by jpe at 12:34 PM on August 17, 2017 [6 favorites]
I wonder if the amount of subsidy they've been given over the years would have been enough to buy them outright?
posted by msbutah at 12:44 PM on August 17, 2017 [17 favorites]
posted by msbutah at 12:44 PM on August 17, 2017 [17 favorites]
If we are trying to reduce our dependency on oil, then why would we want to buy oil industries? That's like buying horse-and-buggy companies when the automobile is starting to catch on. The goal is to make it unnecessary so it ends up being a bad investment. And if it is a bad investment, then we sure shoudn't invest in it.
As a taxpayer I'd rather our government invest in something that has a future and will grow.
Government ownership of the oil industry is part of the cause of the economic collapse of Venezuela.
posted by eye of newt at 12:53 PM on August 17, 2017 [7 favorites]
As a taxpayer I'd rather our government invest in something that has a future and will grow.
Government ownership of the oil industry is part of the cause of the economic collapse of Venezuela.
posted by eye of newt at 12:53 PM on August 17, 2017 [7 favorites]
I work in oil and gas, frankly I'd be in favour of this. Instead of looking at PDVSA though, where the company has been mismanaged by Chavez and his cronies, look to Statoil and manage it for the public good.
Use natural gas and convert power stations away from coal, tax gasoline at it's true environmental cost and give part of that revenue to alternatives support to foster early adoption. Give some more of that money to the EPA and an orphan well fund. We're going to continue to need oil and gas after everyone is driving electric cars so let's not squander it and use it for the public good.
Bonus points: it'll piss off the Kochs.
posted by arcticseal at 1:12 PM on August 17, 2017 [10 favorites]
Use natural gas and convert power stations away from coal, tax gasoline at it's true environmental cost and give part of that revenue to alternatives support to foster early adoption. Give some more of that money to the EPA and an orphan well fund. We're going to continue to need oil and gas after everyone is driving electric cars so let's not squander it and use it for the public good.
Bonus points: it'll piss off the Kochs.
posted by arcticseal at 1:12 PM on August 17, 2017 [10 favorites]
The Norwegian's management of their North Sea oil fields is such an example of good governance that it hardly seems possible. Whereas Maggie Thatcher just used the money to cut taxes for rich people. Which country has a healthier outlook today?
Having worked in the oil industry, and knowing the political views of many of the people who work in it, I'd bet that if the government bought out the industry a significant fraction of the talent would leave to seek jobs elsewhere in the world. Pretty much what happened in Venezuela when Chavez nationalized. They are used to very high salaries and many of them have worked overseas before, they have contacts and not much competition for their skills.
Once you got over that short term hump, it sure would be a lot easier to phase out fossil fuels though. Gasoline powered vehicles would be the easiest to phase out. Ships and long distance jets would be hardest.
posted by Bee'sWing at 1:42 PM on August 17, 2017 [10 favorites]
Having worked in the oil industry, and knowing the political views of many of the people who work in it, I'd bet that if the government bought out the industry a significant fraction of the talent would leave to seek jobs elsewhere in the world. Pretty much what happened in Venezuela when Chavez nationalized. They are used to very high salaries and many of them have worked overseas before, they have contacts and not much competition for their skills.
Once you got over that short term hump, it sure would be a lot easier to phase out fossil fuels though. Gasoline powered vehicles would be the easiest to phase out. Ships and long distance jets would be hardest.
posted by Bee'sWing at 1:42 PM on August 17, 2017 [10 favorites]
Government ownership of the oil industry is part of the cause of the economic collapse of Venezuela.
Venezuela has truly enormous oil deposits but they are badly biodegraded and extraordinarily difficult and expensive to produce. A company like Exxon, with its deep pockets of capital, incredible engineering skills and thousands of years of experience in cost cutting and efficiency can make money with something like that. But everyone knew what was going to happen when Chavez cut off capital investment, and drove off technical talent. They were able to produce for a while and then everything went to shit.
posted by Bee'sWing at 2:12 PM on August 17, 2017 [3 favorites]
Venezuela has truly enormous oil deposits but they are badly biodegraded and extraordinarily difficult and expensive to produce. A company like Exxon, with its deep pockets of capital, incredible engineering skills and thousands of years of experience in cost cutting and efficiency can make money with something like that. But everyone knew what was going to happen when Chavez cut off capital investment, and drove off technical talent. They were able to produce for a while and then everything went to shit.
posted by Bee'sWing at 2:12 PM on August 17, 2017 [3 favorites]
The fifth amendment would require that any seizure (1) be for a public purpose; and (2) be accompanied by the payment of fair market value.
Let's call the public purpose the safeguarding of the public good with regard to the climate, environment, public health, and phasing out of the industry as far as possible. Then let's bill the hell out of them to clean up their messes via spills, waste, and improper disposal, then we'll gracefully allow them to offset that against the price of the fair market value and pay them the $.96 left over.
posted by BlueHorse at 2:31 PM on August 17, 2017 [9 favorites]
Let's call the public purpose the safeguarding of the public good with regard to the climate, environment, public health, and phasing out of the industry as far as possible. Then let's bill the hell out of them to clean up their messes via spills, waste, and improper disposal, then we'll gracefully allow them to offset that against the price of the fair market value and pay them the $.96 left over.
posted by BlueHorse at 2:31 PM on August 17, 2017 [9 favorites]
If the horse and buggy industry was choking the planet to death, I'd say the government should buy them too. "Government investments" should not be treated like "business investments"; I think we all know how running the government like a business is going.
posted by MCMikeNamara at 2:34 PM on August 17, 2017 [5 favorites]
posted by MCMikeNamara at 2:34 PM on August 17, 2017 [5 favorites]
As it says in wind-down, the idea is to buy the oil industry like how Judge Doom buys the red car.
posted by The Whelk at 2:37 PM on August 17, 2017 [1 favorite]
posted by The Whelk at 2:37 PM on August 17, 2017 [1 favorite]
I'm not clear why this would be money better spent than on R&D and even just flat-out subsidization of alternatives. Why reward the oil companies and their investors As others have pointed out, oil companies are poised to become the buggy-whip manufacturers of the 21st century; at least for electricity generation, petroleum is fast becoming uncompetitive on its own. We could speed that up by pushing on the other side of the equation, too.
This seems like throwing a dying industry a lifeline; I'd much rather beat them with an oar.
Politically, phasing out oil by buying the industry and shutting it down seems like a hilarious non-starter, because the result would be high pump prices — you'd need that to happen, because absent the subsidization of alternatives, that would be where you'd get the ROI for other companies to jump in. Environmentally and maybe even economically, high fuel prices are a good thing, but it's to a modern economy what high food prices were to every prior period in history: a good way to get yourself thrown out of power.
While subsidization risks distorting the industry receiving the subsidies by picking winners before the market does, it has the advantage of not depending on market signals — higher prices — to drive investment. Meaning you can get people switched off of oil without a price shock that's going to lead to another decade or two of "drill, baby, drill" just out of rage.
And TBH, if you look at big R&D efforts of the sort that you'd need to really change over a civilization to a different primary energy source (or several), they tend to be things where more centralized planning actually does work fairly well, and private-sector investment tends to fall short. Having a bunch of techocrats sit in a room and create a plan is a really shitty way to distribute resources when it comes to consumer goods or entertainment or lots of other markets where the emergent behavior of many individuals is key. But it's probably not a bad way to evaluate the long-term externalities of, say, PV panels vs. solar-thermal vs. tidal generation, which the market is unlikely to ever price correctly. Hence the major traditional argument against subsidization doesn't really pan out.
That said, the other major argument against subsidization, which is that it easily becomes a cover for corruption and public-private money funneling, is still operative. I have some ideas there, but they mostly involve taking those now-surplus statuary plinths we're freeing up all over, and fitting them with iron starvation cages, pour encourager etc. I've been advised there are some Constitutional issues with this, however.
posted by Kadin2048 at 3:08 PM on August 17, 2017 [2 favorites]
This seems like throwing a dying industry a lifeline; I'd much rather beat them with an oar.
Politically, phasing out oil by buying the industry and shutting it down seems like a hilarious non-starter, because the result would be high pump prices — you'd need that to happen, because absent the subsidization of alternatives, that would be where you'd get the ROI for other companies to jump in. Environmentally and maybe even economically, high fuel prices are a good thing, but it's to a modern economy what high food prices were to every prior period in history: a good way to get yourself thrown out of power.
While subsidization risks distorting the industry receiving the subsidies by picking winners before the market does, it has the advantage of not depending on market signals — higher prices — to drive investment. Meaning you can get people switched off of oil without a price shock that's going to lead to another decade or two of "drill, baby, drill" just out of rage.
And TBH, if you look at big R&D efforts of the sort that you'd need to really change over a civilization to a different primary energy source (or several), they tend to be things where more centralized planning actually does work fairly well, and private-sector investment tends to fall short. Having a bunch of techocrats sit in a room and create a plan is a really shitty way to distribute resources when it comes to consumer goods or entertainment or lots of other markets where the emergent behavior of many individuals is key. But it's probably not a bad way to evaluate the long-term externalities of, say, PV panels vs. solar-thermal vs. tidal generation, which the market is unlikely to ever price correctly. Hence the major traditional argument against subsidization doesn't really pan out.
That said, the other major argument against subsidization, which is that it easily becomes a cover for corruption and public-private money funneling, is still operative. I have some ideas there, but they mostly involve taking those now-surplus statuary plinths we're freeing up all over, and fitting them with iron starvation cages, pour encourager etc. I've been advised there are some Constitutional issues with this, however.
posted by Kadin2048 at 3:08 PM on August 17, 2017 [2 favorites]
My personal suspicion is we'll eventually figure out how to drag energy out of oil without burning it, and then merge that energy with carbon (or nitrogen) from the atmosphere for storage and transport. Sounds a little silly, but the former plugs into existing solar/renewable frameworks and the latter supports solar/renewable frameworks. Lithium Ion energy density is nothing compared to chemical fuel. Doesn't mean we have to sacrifice the atmosphere to use it.
posted by effugas at 4:05 PM on August 17, 2017
posted by effugas at 4:05 PM on August 17, 2017
If the horse and buggy industry was choking the planet to death,
Interestingly, it pretty much was when internal combustion and mass production came along and gave us the car as we know it. Something like half of the food produced in the US went to forage for draft animals, not food for livestock for eating, but just to animals providing motive power. And the streets were paved with manure and disposing of the horse carcasses was not a trivial matter. All these things were a MAJOR source of pollution in the cities that shortened life spans and impacted quality of life. As bad as smog and such are from internal combustion it was very much cleaner in day to day quality of life than animal power was. Increasing CO2 in the atmosphere was just one of the nasty little unintended side effects every step forward produces.
posted by bartonlong at 5:02 PM on August 17, 2017 [10 favorites]
Interestingly, it pretty much was when internal combustion and mass production came along and gave us the car as we know it. Something like half of the food produced in the US went to forage for draft animals, not food for livestock for eating, but just to animals providing motive power. And the streets were paved with manure and disposing of the horse carcasses was not a trivial matter. All these things were a MAJOR source of pollution in the cities that shortened life spans and impacted quality of life. As bad as smog and such are from internal combustion it was very much cleaner in day to day quality of life than animal power was. Increasing CO2 in the atmosphere was just one of the nasty little unintended side effects every step forward produces.
posted by bartonlong at 5:02 PM on August 17, 2017 [10 favorites]
Since we're already dreaming the impossible, sure, let's pretend we don't have constitutional rights.
No constitutional rights? Who says it's impossible!
posted by 2N2222 at 5:16 PM on August 17, 2017
No constitutional rights? Who says it's impossible!
posted by 2N2222 at 5:16 PM on August 17, 2017
One of the neat ideas floated at the end of the episode was, well lefts say you seize control of the top 25 publicslly traded oil and gas companies? Now what? Well you could use them as a bridge to a non carbon economy but making them a walled off public corporation (or, even stricter a British style Quango ) with a a solid 20 year plan of weaning off fossil fuels and funds that can only be used in the public good and interest, such as cleaning up the effects of the oil and gas industry, doing climate repair work, carbon capture, etc (so you don't step on the toes of emerging renewable businesses) and U.S National Oil can act as a bridge from a carbon economy to s renewable one while also mitigating the effects of the old carbon system (hey why not use the rprofits to help build some anti flooding systems or coastal towns? ) after that keep it on as basically a national plastics industry.
Also I honest cannot believe the free market can do anything about climate change, you need something like a huge federal agency with a single minded goal - a nationalized oil industry could be that while also being a bit of ironic justice.
posted by The Whelk at 5:28 PM on August 17, 2017 [4 favorites]
Also I honest cannot believe the free market can do anything about climate change, you need something like a huge federal agency with a single minded goal - a nationalized oil industry could be that while also being a bit of ironic justice.
posted by The Whelk at 5:28 PM on August 17, 2017 [4 favorites]
I also liked this episode "U.S Student Debt Forgiveness Makes Economiic zsense"
posted by The Whelk at 5:39 PM on August 17, 2017 [1 favorite]
posted by The Whelk at 5:39 PM on August 17, 2017 [1 favorite]
Bonus points: it'll piss off the Kochs.
Heh. They are already fed up with Trump. I'm expecting them to put a contract out on him any day now.
posted by notreally at 5:56 PM on August 17, 2017 [1 favorite]
I wouldn't put it past the Koch brothers to be behind this whole thing. They made their billions from coal, and now that it is going out of style, they'll convince environmentalists and the government to buy out the dying industry at some ridiculously inflated cost.
posted by eye of newt at 8:58 PM on August 17, 2017 [1 favorite]
posted by eye of newt at 8:58 PM on August 17, 2017 [1 favorite]
If we are trying to reduce our dependency on oil, then why would we want to buy oil industries? That's like buying horse-and-buggy companies when the automobile is starting to catch on. The goal is to make it unnecessary so it ends up being a bad investment. And if it is a bad investment, then we sure shoudn't invest in it.
As a taxpayer I'd rather our government invest in something that has a future and will grow.
I'm not clear why this would be money better spent than on R&D and even just flat-out subsidization of alternatives.
This is internalizing neoliberal pundit thinking, that government activities that don't make accounting profits are bad investments.
Of course paying money to buy coal and oil power plants, and shutting them down, won't make money. That is why only the government will do something like buy these things and shut them down. But from an American old fashioned left-liberal point of view this is a classic situation were government action makes sense, as the actual long term return--in terms of societal benefit--on not burning coal and oil is pretty damn high.
Yeah, we'd be rewarding bad people. Same thing happens when we negotiate with some brutal state like Iran--it's cheaper and more likely to be successful than going to war. This is classic paying off people you don't like. If you think you can shut them down with an aggressive carbon tax or the threat posed by the 2% solar economy we have, go for it. But as long as individuals are making a profit off it they'll be fighting to keep them running.
Admittedly, I kind of think this plan solves the problem by cleverly replacing the thorny "If only we had the political will to do a massive carbon tax!" with the equally thorny "If only we had the political will to nationalize the fossil fuel industries!" but I get the point of it and I'm behind anything that might work.
Having a bunch of techocrats sit in a room and create a plan [ . . . is] probably not a bad way to evaluate the long-term externalities of, say, PV panels vs. solar-thermal vs. tidal generation,
Sure, but the wisdom of producing power using PV vs. solar-thermal probably doesn't hinge on externalities as much as on traditional capital and operating cost measures.
posted by mark k at 9:56 PM on August 17, 2017 [4 favorites]
As a taxpayer I'd rather our government invest in something that has a future and will grow.
I'm not clear why this would be money better spent than on R&D and even just flat-out subsidization of alternatives.
This is internalizing neoliberal pundit thinking, that government activities that don't make accounting profits are bad investments.
Of course paying money to buy coal and oil power plants, and shutting them down, won't make money. That is why only the government will do something like buy these things and shut them down. But from an American old fashioned left-liberal point of view this is a classic situation were government action makes sense, as the actual long term return--in terms of societal benefit--on not burning coal and oil is pretty damn high.
Yeah, we'd be rewarding bad people. Same thing happens when we negotiate with some brutal state like Iran--it's cheaper and more likely to be successful than going to war. This is classic paying off people you don't like. If you think you can shut them down with an aggressive carbon tax or the threat posed by the 2% solar economy we have, go for it. But as long as individuals are making a profit off it they'll be fighting to keep them running.
Admittedly, I kind of think this plan solves the problem by cleverly replacing the thorny "If only we had the political will to do a massive carbon tax!" with the equally thorny "If only we had the political will to nationalize the fossil fuel industries!" but I get the point of it and I'm behind anything that might work.
Having a bunch of techocrats sit in a room and create a plan [ . . . is] probably not a bad way to evaluate the long-term externalities of, say, PV panels vs. solar-thermal vs. tidal generation,
Sure, but the wisdom of producing power using PV vs. solar-thermal probably doesn't hinge on externalities as much as on traditional capital and operating cost measures.
posted by mark k at 9:56 PM on August 17, 2017 [4 favorites]
This is a good start to communal public ownership of everything. I'm for it.
posted by Joseph Gurl at 1:31 AM on August 18, 2017 [1 favorite]
posted by Joseph Gurl at 1:31 AM on August 18, 2017 [1 favorite]
I don't think they need any more money, renewables are the way.
posted by jenjen23 at 4:25 AM on August 18, 2017
posted by jenjen23 at 4:25 AM on August 18, 2017
A company like Exxon, with its deep pockets of capital, incredible engineering skills and thousands of years of experience in cost cutting and efficiency can make money with something like that.
Who can forget their groundbreaking work with Tutankhamun?
Unless you meant person-years. ;)
posted by fairmettle at 4:33 AM on August 18, 2017
Who can forget their groundbreaking work with Tutankhamun?
Unless you meant person-years. ;)
posted by fairmettle at 4:33 AM on August 18, 2017
Lots of the O&G companies are transforming to"energy" companies anyway, they see the horizon on hydrocarbons and don't intend to be left behind like the coal industry was. A significant part of their R&D is already looking at alternatives, battery technology and carbon reduction. The issue here is that at some point, they'll transform to a point where they will spin off the old-school carbon heavy divisions with the attendant liabilities and romp away leaving the responsibility with the tax payer for site clean-up and orphan wells.
So, tie it all together in a national industry, revenue to address those concerns and an entity works collaboratively with the EPA. We'll still need the talent to work the assets, so pay them accordingly for their knowledge, only now the profits are being used to benefit the public not shareholders.
posted by arcticseal at 5:28 AM on August 18, 2017 [1 favorite]
So, tie it all together in a national industry, revenue to address those concerns and an entity works collaboratively with the EPA. We'll still need the talent to work the assets, so pay them accordingly for their knowledge, only now the profits are being used to benefit the public not shareholders.
posted by arcticseal at 5:28 AM on August 18, 2017 [1 favorite]
Heh, I did mean person-years.
There are a lot of bad things about Exxon, mostly that they are just so big that they can push governments around. They aren't known in the industry for their exploration prowess--they aren't good at finding new oil fields. What they are known for is managing huge complicated projects, often in hostile environments, and doing it so well that they made a ton of money at it.
It is a not uncommon story that a small company makes a giant discovery and doesn't have the capital or the engineering skills, or the diplomatic skills to exploit it. The discovery may still be in the ground years later and the company that found it is foundering or even bankrupt.
posted by Bee'sWing at 6:24 AM on August 18, 2017
There are a lot of bad things about Exxon, mostly that they are just so big that they can push governments around. They aren't known in the industry for their exploration prowess--they aren't good at finding new oil fields. What they are known for is managing huge complicated projects, often in hostile environments, and doing it so well that they made a ton of money at it.
It is a not uncommon story that a small company makes a giant discovery and doesn't have the capital or the engineering skills, or the diplomatic skills to exploit it. The discovery may still be in the ground years later and the company that found it is foundering or even bankrupt.
posted by Bee'sWing at 6:24 AM on August 18, 2017
how to drag energy out of oil without burning it
Chemical loop it instead.
The process still emits carbon dioxide, but unlike that emitted by standard air combustion it's not diluted with 80% nitrogen, significantly lowering the energy cost of capturing it.
posted by flabdablet at 6:32 AM on August 18, 2017 [1 favorite]
Chemical loop it instead.
The process still emits carbon dioxide, but unlike that emitted by standard air combustion it's not diluted with 80% nitrogen, significantly lowering the energy cost of capturing it.
posted by flabdablet at 6:32 AM on August 18, 2017 [1 favorite]
I'm way late to the thread but just got around to listening to the podcast and wanted to suggest: wouldn't the coal industry alone be a really good test case for this? It's tiny, the people who depend on it are a political hobby horse for the right, and it's the filthiest of fossil fuels. I could see a Dem platform proposing that we buy it out and put all the out-of-work miners back on the job, cleaning up the mess made by their former employers. Now we have a bunch of trained pollution remediation specialists, a cleaner Appalachia, and a big step toward carbon reduction. Plus it's a great Fuck You to the anti-regulation climate nihilists.
posted by contraption at 5:53 PM on August 30, 2017 [2 favorites]
posted by contraption at 5:53 PM on August 30, 2017 [2 favorites]
That actually sounds like a pretty good idea to me.
posted by tobascodagama at 6:02 PM on August 30, 2017
posted by tobascodagama at 6:02 PM on August 30, 2017
$4.7B would buy out the stakeholders in a dying industry and give the federal government control over cleanup efforts it would likely be helping to fund anyway. There would probably be some assets to sell off and make some of that back, and the stage would be set for a huge economic stimulus to the region.
posted by contraption at 7:55 AM on August 31, 2017 [3 favorites]
posted by contraption at 7:55 AM on August 31, 2017 [3 favorites]
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