UN and US authorities step up attacks on the oil industry

“The godfathers of climate chaos – the fossil fuel industry – are raking in record profits and raking in trillions in subsidies funded by taxpayers’ money,” the United Nations Secretary-General said this week in a speech on World Environment Day.

Antonio Guterres then painted an apocalyptic picture of our immediate future marked by mass extinction – all because of the oil and gas industry – and suggested that advertisers should stop working with the industry and governments should ban oil and gas advertising altogether. But advertising bans are unlikely to stop people – including Guterres himself – from using oil products.

But the UN chief’s impassioned speech condemning the oil industry was not the only one this week. Nor was his bold call for a ban on oil and gas advertising unprecedented. With the transition stalling, attacks on the oil and gas industry by various national and international politicians have increased recently – even as reports come in that the expansion of low-carbon electricity generation capacity is breaking records.

Earlier this week, before Guterres’ speech and his proposal to impose a special profit tax on oil companies, a group of Democratic lawmakers wrote a letter to the Justice Department asking the institution to launch an investigation into the oil companies. The investigation was prompted by allegations that US oil companies had colluded with OPEC to keep fuel prices high and – even more interesting – had used their profits to keep prices low at the pump rather than passing them on to end users. Related topics: Oil exploration companies: South Korea’s offshore reserves have great potential

This idea, which in any other context would sound eccentric and would not truly embody the spirit of a free market, apparently seemed logical enough to the authors. They called on the Justice Department to “investigate rigorously to uncover and punish wrongdoing.”

“If U.S. oil companies are colluding with each other and with foreign cartels to manipulate global oil markets and harm the American consumer, who then has to pay more at the pump, then Congress and the American people have a right to know about it,” the lawmakers said.

In fact, during the pandemic-induced lockdown year of 2020, US oil companies cut production in response to the massive collapse in international prices that pushed many smaller producers to the brink of collapse and some even beyond. Cutting production is what any company would do when faced with a market flooded by a sudden drop in demand. But for the group of lawmakers led by Jerrold Nadler, oil and gas is as special a case as it is for Antonio Guterres and the other participants in the World Environment Day celebrations.

No other industry is facing such pressure from legislators and international circles, with the sole aim of putting as much pressure on them as possible to force them to virtually cease their activities. This is somewhat ironic, because if the authors of this letter to the Justice Department get what they want – punishment of the industry – they could inadvertently cause even higher prices at the pump, as producers cut production to get higher prices and offset the hypothetical penalties. For some lawmakers in the US, it seems to be a problem that the country still has a free market.

UN delegate Guterres and some Canadian politicians also seem to have a problem with the free market and are therefore suggesting that governments should ban advertising for oil and gas, ignoring the fact that people do not fill up their cars with petrol because of the advertising, but because they have a basic need to get from one place to another as quickly and conveniently as possible.

If the idea is to ban advertising for oil products of any kind, given the versatility of oil derivatives and their ubiquitous use – including in transition industries such as wind and solar energy and electric mobility – virtually all advertising for them would have to be banned.

To be fair, calls for a ban on advertising for the oil and gas industry have not gained much traction. In Canada, after one MP introduced a bill for such a ban, other MPs from the same party, the NDP, criticized the proposal, saying, “We already have laws against misleading advertising and are more interested in promoting ideas that can actually help people,” and, “It is not helpful to start arguments that only polarize people and get in the way of the real solutions we need.”

The idea of ​​a special tax on special profits levied by the oil and gas industry to cover alleged climate damage also appears to be gaining support in the highest political circles, who are no doubt wondering how governments will cover the costs of the energy transition. But the effect of actual special profits taxes, such as those introduced in the UK, appears to hinder wider adoption. This effect is counterproductive, leading to lower investment and, as a result, lower local oil and gas production.

In theory, this is exactly what the proponents of a special tax and advertising ban want: lower oil and gas production. What they do not want are the consequences of this lower production, such as a cost-of-living crisis that makes the current crisis look like a piece of cake, and unrest as a result. It seems that these anti-oil activists will have to reconcile their attitude towards the energy industry with their future career plans.

By Irina Slav for Oilprice.com

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