Buffett, Jones and Hamm: An Oil Wisdom Trifecta
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What I do know is that the amount of energy and material resources required to extract a barrel of oil out of ground has been slowly rising towards parity with the energy contained in that oil.
I'm now of the mind that politics, the environment, and everything else is a back burner issue until this is solved. I'm starting to use the phrase "I don't give a shit about global warning" (though, actually I do), just to diffuse the politics of it, and stay on topic.
There have been decades of decisions made with a total blindness to the fact that the oil we're burning is priced orders of magnitude cheaper than it should have been. As a society, we're acting like the trust fund kids spending our Earth's energy inheritance with no mind towards the future.
"Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders"
http://tomtoro.com/wp-content/uploads/2015/07/1-tom-toro-yes...
Oil and gas companies get a lot of bad press and maybe rightfully so, but the sad thing is that the politicians and the users of oil and gas are the main ones to blame. If no-one used oil and gas then there would be no oil companies anymore.
Politicians have known for 20-30 years or more that CO2 causes global warming, but they have done nothing to limit the use of oil and gas. Absolutely nothing. Instead they want to blame the oil companies and bring them to court.
At the same time they blame oil companies, they start to reduce taxes on oil/gas, they ask producing countries to produce more etc. It's nuts.
There have been no major incentives for consumers to move away from big cars with big powerful engines, no incentives for car producers to build more fuel efficient cars.
We could easily have had a car fleet today which consumed 20-30% less than it actually does and that without any major drawbacks in comfort and performance. And that without even transitioning to electric cars.
Sure we can blame politicians as they're supposed to legislate, but people have had no choices. The O&G companies are not blameless, they've been hoarding money and absolving themselves of any responsibility whenever there was a spill or any other catastrophic incident, they did nothing and continue to do nothing, and if they did it was the bare minimum.
I can.
As long as we treat money as paramount, and self-interest as the only valuable rationality, we will, as a society, continue down this road of self-destruction.
We must rediscover our sense of collective responsibility if we are to avoid serious calamities within our lifetimes (at least, for those of us who are still no more than about middle-aged).
Why isn’t that responsibility on consumers who pay the oil companies? People blame the oil companies at the same time they clamour over it’s products and hand over vast sums of cash. How much money do consumers give oil companies per year compared to investors like Warren Buffett?
Now, the reason it's a problem—and the answer to your question—is that oil companies, among others (and more generally, the mega-wealthy and mega-corporations) have a massive amount of power in our world today. To pick a single example, Exxon-Mobil could, by making just a few carefully calculated decisions, reduce the total carbon footprint of our society by an appreciable fraction. The reason they don't is because, in the short term, that would mean giving up some degree of profit, in a system designed to encourage and reward maximizing profit at all costs, and in the long term, unless companies like them are able to completely replace their fossil-fuel operations with some other source of income, they will have to be closed down entirely (or almost entirely) in order to avoid a genuine climate catastrophe.
But their power doesn't stop there. They have enough money to spend that they run massive advertising campaigns promoting bullshit things like "clean coal". They spend absurd amounts every year on lobbying, and on top of that, even if they stopped spending on lobbying tomorrow, they have enough politicians in their pockets in one way or another that they would still be able to effectively dictate their policy positions for years to come, regardless of the desires of their constituents.
Again: that's all looking at one oil company, which, to a certain extent, acts as a single unit as far as decision-making goes—and though there are multiple actual human beings making those decisions, it's still only a small handful compared to the number of people their decisions affect.
Let's contrast that with individuals.
Any one individual can't make enough of a difference to the big oil companies by any of their actions to get them to change, nor can their decisions have remotely the same kind of impact on our overall carbon footprint.
Furthermore, given the state of our society and economy today, for most people to be able to stop supporting fossil fuel companies entirely would mean effectively destroying their livelihoods.
There are three big ways that most Americans today rely on fossil fuels (there are others, of course, but we'll look at these for simplicity's sake): Their car, their heat, and their power.
Electric cars are still significantly more expensive than ICE cars, and even if every car owner in America were able to afford to replace theirs with a pure electric, there simply aren't enough such cars available to make that replacement overnight.
Some houses are already fully heated purely electrically, and "geothermal"/heat pump systems are becoming much more affordable and widely available, but the cost of switching over is still fairly steep...and at least for now, "regular" electric heat costs significantly more in most areas than heating the same house the same amount with oil or gas.
There are places in America where green power is more readily available than others—I'm fortunate enough to live in one; most of my power comes from hydroelectric sources, though there's still some fossil fuel in there. Most don't have that option, and don't have any obvious means of causing such options to become available.
Most importantly, what all of this is sort of glossing over is that even if they had the options technically available to them, for most people, it would be deeply personally irresponsible of them to make the expenditures necessary to minimize their personal carbon footprints, because they would then be in vastly worse financial state (again, if they had the means to do so in the first place, which a huge percentage do not.) So what you are saying is effectively, "Why should we be demanding that the oil companies change their ways, leaving their executives with only a few hundred million in the bank to last them the rest of their lives? We should be demanding that the average American bankrupt themselves to achieve a much lower total reduction in carbon output, instead!"
TL;DR: Consumers support the fossil fuel industry because there's effectively no choice. Oil executives have a very real choice in how they continue to devastate our ecosystem.
You say, "Exxon-Mobil could, by making just a few carefully calculated decisions, reduce the total carbon footprint of our society by an appreciable fraction".
What decisions are you referring to? If you are referring to extracting oil as efficiently and environmentally friendly as possible, then my answer is I'm sure they are trying (due to consumer demand by the way) but operation efficiency is a drop in the bucket to the consumer burning the end product.
Now discussing oil consumption, you say "Consumers support the fossil fuel industry because there's effectively no choice" and "it would be deeply personally irresponsible of them to make the expenditures necessary to minimize their personal carbon footprints, because they would then be in vastly worse financial state".
My response is: crushing the companies that produce the goods that consumers rely on just hurts consumers. Look at what trying to cut of Russian oil is doing to gasoline prices at the pump. How can you demand oil companies to stop producing oil, when you also want oil companies to produce more oil to help consumers.
The solution is, as you alluded to, is to provide consumers with more choice, more alternatives... and that is at the consumer level. Consumers have to make the change. It's consumer demand that companies are trying to fulfill.
Car manufacturers would build more fuel efficient cars as that is then what consumers want.
The oil companies would sell less oil and less CO2 is released.
The government could invest the extra tax income on subsidizing electric cars, and fuel efficient cars (and penalize and tax cars that consume a lot), solar panel installations, wind power etc.
More fuel efficient and electric cars come to market. Even less oil is used.
Oil companies will start to put their huge yearly investments into renewable energy instead of oil exploration as it will be more profitable (or at least as profitable as oil used to be).
And we have a positive feedback loop.
Governments just need to give more incentives to consumers, and indirectly to car manufacturers and oil companies, to make the right choices.
Thanks to the war (as unfortunate as the war is) we are going in the right direction. Unless the politicians screw up again and reduce the taxes on oil.
I can agree with you that we should be moving off oil as soon and as much as possible, but we will never be completely off oil. Oil has led to the rapid progress of humanity, but at a terrible cost for the environment. And like it or not the oil companies will have to play a large part in the shift to renewables.
Also, let's not forget that us humans have to live in the environment, so "a terrible cost for the environment" is a terrible cost for humans. Unfortunately, that cost is externalized so it doesn't affect Buffetts precious ROI.
both made fortunes, but one thought it was a good idea to give it all away
I prefer to live like Dalí, the fruits of my labor are for my children
Your money isn't the only thing you leave to your children - you also leave this planet. Do you want to give your children a planet that is more impoverished and conflict-ridden?
https://www.ipcc.ch/report/ar6/wg2/about/frequently-asked-qu...
At the end of 2021, Berkshire owned about $4.5 billion of Chevron shares. In that same year, Berkshire Hathaway Energy, which has made huge investments in wind and solar, had $4 billion in earnings [0]. BHE is investing $18 billion (starting in 2006 and continuing through 2030) to modernize the electrical grid to improve transmission from the remote areas that are the best sources of wind and solar energy (as opposed to near coal plants). BNSF, Berkshire's railroad, which is a far more carbon-efficient way to move freight than roads and trucking, invested $41 billion in fixed assets between 2010 and 2020 [1].
It is possible for someone's approach to energy investing to be multi-faceted.
[0] https://www.berkshirehathaway.com/letters/2021ltr.pdf [1] https://www.berkshirehathaway.com/letters/2020ltr.pdf
In fact that's the only meaningful/sensible way to interpret the phrase "terrible cost for the environment". For most of the planet's history even while supporting all sorts of weird and wonderful lifeforms, the environment would have been pretty hostile to humans, and almost certainly unable to support 9+ billion of us. In principle with enough tech some of humanity could survive even without a hospitable natural environment, but it's not an existence many would choose.