5 ms·

I was pretty surprised by the smallness of the claimed fraud. $500M - $1.5B is barely half a percent of the Exxon's market value, which is $300B. Does this mean

I was pretty surprised by the smallness of the claimed fraud. $500M - $1.5B is barely half a percent of the Exxon's market value, which is $300B. Does this mean that the internal projections regarding climate change were / are relatively accurate? What benchmark is being used as the "true cost" in the case? I had seen before the articles about Exxon's own scientific studies and internal documents showing a very clear understanding of climate change back in the 70s, so I was expecting much more meaningful numbers for the claimed fraud, given how much one would expect it to impact their business across the decades.

cagenut 7y ago
The cost of climate change to exxon mobile is nearly binary. It is much more existential than a measurable vector. If we are to stay under 1.5C, 80%+ of their reserves, and therefore their book value, must stay in the ground. These accounting investigations are a fun little exercise in trying to wedge open cracks, but no, the numbers don't really mean much.
- vonmoltke 7y ago
  > 80%+ of their reserves, and therefore their book value, must stay in the ground Can we please stop with the "stay in the ground" meme? It makes for a nice sound bite/slogan, but is not the only way to keep the carbon in oil from becoming carbon dioxide in the atmosphere.
  - tempguy9999 7y ago
    What other ways are there that are commercially viable now?
    - vonmoltke 7y ago
      There are two issues. First is fuel versus non-fuel usage of oil. Oil for non-fuel purposes can be drawn indefinitely with little climate impact, provided oil for fuel usage is phased out. Second, on fuel usage you are correct there is currently no commercially-viable way to make it carbon-neutral. There may be in the future, and companies like Exxon are understandably working towards that. It might never happen, but that is not a reason to engage in sensationalism.
      - jnwatson 7y ago
        It isn’t sensational at all. Imagining some future tech where oil can be used for fuel in a carbon neutral manner is essentially science fiction. Reducing petroleum demand to just plastics and lubricants eliminates demand to the point at which most of the reserves do remain in the ground. Mild oversimplification is not sensationalism.
        vonmoltke 7y ago
        Reducing demand changes the rate of extraction. That, in turn, means reserves stay in the ground longer than they would if they were burned. "Needs to stay in the ground" says extraction must stop. That is not the case.
        tempguy9999 7y ago
        > "Needs to stay in the ground" says extraction must stop. If burning it releases carbon which we can't viably recapture, which you acknowledge[0], then saying... > That is not the case. ...is wrong. Unless you mean climate change causes by anthropogenic carbon release isn't happening. [0] "you are correct there is currently no commercially-viable way to make it carbon-neutral" (https://news.ycombinator.com/item?id=21325863 https://news.ycombinator.com/item?id=21325863)
        TeMPOraL 7y ago
        As I understand it, GP is essentially saying this: there are two main uses for oil - fuel (burning) and plastics. The former emits carbon to the atmosphere, the latter doesn't. To achieve full success emissions-wise, we need to kill off the first use. Second use is fine from emissions standpoint - but keeping it implies extraction needs to happen. To me, GP is quite precise and also correct. I don't understand why you try to cast them as a climate change denier.
        tempguy9999 7y ago
        I can't find figures but I expect the amount of crude used for fuel is very high compared to its other uses. Maybe 99% but that's just a guess. I'll try to find figures tomorrow (it's late here). Let's call it 95% for now. If 95% of energy is not burnt but extracted for other uses then it stays in the ground 20 times longer (ok, not forever). But we have no way of replacing that huge energy source that is crude. So we will not stop because there's no alternative. What he suggests is a counsel of perfection - "precise and also correct", I agree, but it's not going to happen. So it's a useless suggestion AFAICS. Basically I'm confused as to what he's suggesting.
makomk 7y ago
Those articles seem to overstate their case a tad. For example, here's a quote from one of the internal-use-only documents being bandied around as proof Exxon knew about the impacts of climate change: "However, the quantitative effect is very speculative because the data base supporting it is weak. The CO2 balance between the atwosphere, the biosphere and the oceans is very ill-defined. Also, the overall effect ofi ncreasing atmospheric CO2 concentration on the world environment is not well understood, Finally, the relative effect of other impacts on the earth's climate, such as solar activity, volcanic action, etc. may be as great as that of CO2." Sound familiar? In any case, that doesn't seem to be what this lawsuit is about. If I'm understanding it correctly, Exxon used a higher proxy cost of carbon ($60/ton) in their externally-published justification for why their fossil fuel reserves are unlikely to become "stranded" (economically unviable to extract) due to carbon taxes than they used internally when deciding what would be most profitable to invest money in ($40/ton). The prosecutor alleges that by doing this, they mislead investors into thinking they were applying higher projected carbon costs than they were actually using. Frankly, it doesn't sound like a very good case. The stranding analysis literally says "We do not publish the economic bases upon which we evaluate investments due to competitive considerations." In addition, higher carbon taxes can affect the profitability of future investments in both directions - making efficiency improvements and clean energy investment more profitable but ones that produce more carbon emissions less so - but only increases the risks of reserves being stranded, so it seems highly prudent to use a higher carbon tax figure than they're actually expecting when assessing the risk of stranding, especially given that it could entirely wipe out the value of their reserves.
- zrail 7y ago
  As Matt Levine puts it, Everything Is Securities Fraud

cagenut 7y ago

The cost of climate change to exxon mobile is nearly binary. It is much more existential than a measurable vector. If we are to stay under 1.5C, 80%+ of their reserves, and therefore their book value, must stay in the ground. These accounting investigations are a fun little exercise in trying to wedge open cracks, but no, the numbers don't really mean much.

vonmoltke 7y ago
> 80%+ of their reserves, and therefore their book value, must stay in the ground Can we please stop with the "stay in the ground" meme? It makes for a nice sound bite/slogan, but is not the only way to keep the carbon in oil from becoming carbon dioxide in the atmosphere.
- tempguy9999 7y ago
  What other ways are there that are commercially viable now?
  - vonmoltke 7y ago
    There are two issues. First is fuel versus non-fuel usage of oil. Oil for non-fuel purposes can be drawn indefinitely with little climate impact, provided oil for fuel usage is phased out. Second, on fuel usage you are correct there is currently no commercially-viable way to make it carbon-neutral. There may be in the future, and companies like Exxon are understandably working towards that. It might never happen, but that is not a reason to engage in sensationalism.
    - jnwatson 7y ago
      It isn’t sensational at all. Imagining some future tech where oil can be used for fuel in a carbon neutral manner is essentially science fiction. Reducing petroleum demand to just plastics and lubricants eliminates demand to the point at which most of the reserves do remain in the ground. Mild oversimplification is not sensationalism.
      - vonmoltke 7y ago
        Reducing demand changes the rate of extraction. That, in turn, means reserves stay in the ground longer than they would if they were burned. "Needs to stay in the ground" says extraction must stop. That is not the case.
        tempguy9999 7y ago
        > "Needs to stay in the ground" says extraction must stop. If burning it releases carbon which we can't viably recapture, which you acknowledge[0], then saying... > That is not the case. ...is wrong. Unless you mean climate change causes by anthropogenic carbon release isn't happening. [0] "you are correct there is currently no commercially-viable way to make it carbon-neutral" (https://news.ycombinator.com/item?id=21325863 https://news.ycombinator.com/item?id=21325863)
        TeMPOraL 7y ago
        As I understand it, GP is essentially saying this: there are two main uses for oil - fuel (burning) and plastics. The former emits carbon to the atmosphere, the latter doesn't. To achieve full success emissions-wise, we need to kill off the first use. Second use is fine from emissions standpoint - but keeping it implies extraction needs to happen. To me, GP is quite precise and also correct. I don't understand why you try to cast them as a climate change denier.
        tempguy9999 7y ago
        I can't find figures but I expect the amount of crude used for fuel is very high compared to its other uses. Maybe 99% but that's just a guess. I'll try to find figures tomorrow (it's late here). Let's call it 95% for now. If 95% of energy is not burnt but extracted for other uses then it stays in the ground 20 times longer (ok, not forever). But we have no way of replacing that huge energy source that is crude. So we will not stop because there's no alternative. What he suggests is a counsel of perfection - "precise and also correct", I agree, but it's not going to happen. So it's a useless suggestion AFAICS. Basically I'm confused as to what he's suggesting.

makomk 7y ago

Those articles seem to overstate their case a tad. For example, here's a quote from one of the internal-use-only documents being bandied around as proof Exxon knew about the impacts of climate change: "However, the quantitative effect is very speculative because the data base supporting it is weak. The CO2 balance between the atwosphere, the biosphere and the oceans is very ill-defined. Also, the overall effect ofi ncreasing atmospheric CO2 concentration on the world environment is not well understood, Finally, the relative effect of other impacts on the earth's climate, such as solar activity, volcanic action, etc. may be as great as that of CO2." Sound familiar? In any case, that doesn't seem to be what this lawsuit is about. If I'm understanding it correctly, Exxon used a higher proxy cost of carbon ($60/ton) in their externally-published justification for why their fossil fuel reserves are unlikely to become "stranded" (economically unviable to extract) due to carbon taxes than they used internally when deciding what would be most profitable to invest money in ($40/ton). The prosecutor alleges that by doing this, they mislead investors into thinking they were applying higher projected carbon costs than they were actually using. Frankly, it doesn't sound like a very good case. The stranding analysis literally says "We do not publish the economic bases upon which we evaluate investments due to competitive considerations." In addition, higher carbon taxes can affect the profitability of future investments in both directions - making efficiency improvements and clean energy investment more profitable but ones that produce more carbon emissions less so - but only increases the risks of reserves being stranded, so it seems highly prudent to use a higher carbon tax figure than they're actually expecting when assessing the risk of stranding, especially given that it could entirely wipe out the value of their reserves.

zrail 7y ago
As Matt Levine puts it, Everything Is Securities Fraud