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It could cost $21B to clean up California’s oil sites, study finds
- ouid 3y agoSeize their operations elsewhere?
- gruez 3y agoGetting a court ruling enforced in a foreign country is going to be very difficult.
- toomuchtodo 3y agoMost global finance happens in NYC. California could also seize wells via eminent domain now to start remediating early, instead of allowing continued extraction and profit, with the end result still being leaving taxpayers on the hook after shareholders throw the carcass on the public tab. They’re the fifth largest global economy, they can afford to litigate challenges until the heat death of O&G. Kill the businesses with forced liability for the costs to clean up their assets.
- abernard1 3y ago> They’re the fifth largest global economy Were there perhaps reasons why California was (at least for now) the fifth largest global economy? And could that be partially related to this particular story? I for one encourage California to file suit on all of its industries, as its "fifth largest economy" status is immutable and unrelated to all icky things involving the physical world. File suits against oil and gas, agriculture, the defense sector and aerospace, manufacturing, and imports. Make real estate unrealistically expensive and provide all physical storefronts with sufficiently prohibitive regulations to show them just who is boss in this new ethereal, software-and-services only economy. The fifth largest economy can surely do that. That will teach them a lesson.
- toomuchtodo 3y agoThe industries you mention aren’t going to leave California with enormous liabilities such that the wells that will require remediation enumerated in this report will. Absolutely, drive businesses dumping externalities on the state taxpayers out. There is no reason to keep them if it’s a net negative to the tune of $21B. You’re stealing from taxpayers for shareholder profits otherwise.
- dylan604 3y ago>There is no reason to keep them if it’s a net negative to the tune of $21B. One reason is that the people benefiting from the use of the thing now rarely are the ones to suffer the damages that pop up later.
- abernard1 3y agoExcept of course, it's not negative to the tune of $21B. Any more than California diverting half its rainwater to the ocean was either environmentally or economically useful to its ecosystem. This is the same state where a good 70% of the population was under the delusion its state government could competently produce a train from North to South _and_ that they actually wanted to do so for altruistic reasons unrelated to buying off that critical missing piece of the legislature for supermajority budget power. This is the same state whose very non-unique ecosystem plagues it with wildfires because they have no forest management. The same state whose governor and highest ranking elected officials graduated from a city that can't figure out how to keep homeless people from dying on the street in droves. California, and especially its "expert" class, is a political construction. It's amazing that after 50 years of chronic failure and a tax base solely built around capital gains and rent extraction from their two-tiered feudal economic sector that anyone trusts anything that comes out of California. It's delusional. If people's status wasn't so tied into this dream and idea of California progress, everyone could see it for what it truly is.
- toomuchtodo 3y ago> Except of course, it's not negative to the tune of $21B. Please prove this assertion with citations. The rest of your comment has no relevance to the topic at hand.
- nradov 3y agoSeizing wells using eminent domain would be extremely expensive because the state would have to compensate owners at the current fair market value.
- toomuchtodo 3y agoDoes fair market value include future remediation costs? And if not, perhaps policy should specify that it does. If the well has zero FMV (future revenue minus remediation costs is negative), there is nothing to compensate the owner for. The state is simply saying, “you may no longer extract what you can’t afford to wind down in an orderly fashion.” The well is already worthless. Allow them to keep the well if they put up a sufficient bond to cleanup in the future, using reasonable future well closure and cleanup costs. They will be unwilling to if cleanup costs > remaining extraction value (assuming economically rational actor). Edit: https://news.ycombinator.com/item?id=36182494 https://news.ycombinator.com/item?id=36182494 https://www.brookings.edu/research/overview-and-analysis-of-the-biden-administrations-recent-regulatory-review-and-analysis-changes/ https://www.brookings.edu/research/overview-and-analysis-of-...
- robotresearcher 3y agoIf legislation applied the externalities properly, the FMV would be much lower, or if you believe the article, maybe negative.
- deleted 3y ago[deleted]
- ckemere 3y agoI'm sure each well is an LLC. Limiting liability through corporations is imhop the biggest problem with the current world....
- thx-2718 3y ago"Taxpayers will likely have to cover much of the difference to ensure wells are plugged and not left to leak brine, toxic chemicals and climate-warming methane." Sounds like they've solved the problem already.
- dclowd9901 3y agoAs it’s always been. I cannot for the life of me figure out how we don’t have an amendment on the books that says “if you produce something in or from this country, you must see to its entire lifecycle”. Just kidding, I know exactly why we don’t have such an amendment.
- whitemary 3y ago>I know exactly why we don’t have such an amendment. Why?
- abakker 3y agoBecause the people making money from not having it can afford lobbyists to prevent having it. See: regulatory capture. Also see: politics as career.
- weaksauce 3y agoare you kidding? it's because the monied interests almost never have to deal with negative externalities and the cleanup of direct negatives because they are the ones that pay the people voted into power with that money to make the laws that could do such a thing. california is about as progressive as it comes in that regard but even then the machine of progress inches. look at the pg&e dixie fire that had a cost of well over 1 billion dollars (1000 million dollars) and they got fined 55 million dollars so they could avoid criminal charges.
- woleium 3y agoThe Biden administration have just changed the rules about environmental assessments to include all future costs. It's a _big_ win. I'm sure there is a better source, but this covers it https://www.brookings.edu/research/overview-and-analysis-of-the-biden-administrations-recent-regulatory-review-and-analysis-changes/ https://www.brookings.edu/research/overview-and-analysis-of-...
- kortilla 3y agoHow accurate are these costs? This was commissioned by an anti-fossil fuel policy organization and despite taking some feedback from industry, they have a huge bias that perfectly aligns the incentives for them to grossly exaggerate the figures.
- bcrosby95 3y agoIf you want to do it right, you probably want to take their figure and double it. The gov will likely let them skate by though so yeah it'll cost them a buck fifty or something.
- hedora 3y agoAs journalists go, Propublica (and their data science team) is the gold standard for verifying such things before going to press.
- readams 3y agoProPublica definitely has a viewpoint though and I would not recommend treating them as neutral.
- kieselguhr_kid 3y agoThere's no such thing as neutral and you shouldn't treat any journalists as such. I don't know if their viewpoint is relevant here though; the question is about their ability to verify a factual assertion.
- mc32 3y agoOne may count and add things correctly, but one may count things that are not connected or double count items. That's the kind of thing people fudge when trying to convince people one way or another. They usually don't outright make things up.
- darthoctopus 3y ago
- coding123 3y agoIf that's the case then it was never worth doing it in the first place. However we would not be arguing about it on an internet if we hadn't. But the real question is where do we go from here.
- tedunangst 3y agoNo, there will always come a point where the cost to shutdown exceeds future profits. At some point, it will cost more to tear down a windmill than its future profits. Because that ignores all the profits before that point, which is why we're still building new ones.
- throw0101b 3y agoOld/orphaned wells are also a concern in Alberta ('the Texas of Canada'): * https://www.cbc.ca/news/canada/calgary/andrew-leach-scotiabank-rstar-danielle-smith-orphan-wells-1.6746582 https://www.cbc.ca/news/canada/calgary/andrew-leach-scotiaba... * https://www.ctvnews.ca/business/documents-reveal-inside-look-as-alberta-officials-prepared-for-a-landslide-of-orphan-wells-1.6385515 https://www.ctvnews.ca/business/documents-reveal-inside-look... * https://macleans.ca/news/canada/bankrupt-oil-companies-are-saddling-alberta-landowners-with-orphan-wells/ https://macleans.ca/news/canada/bankrupt-oil-companies-are-s... * https://en.wikipedia.org/wiki/Orphan_wells_in_Alberta,_Canada https://en.wikipedia.org/wiki/Orphan_wells_in_Alberta,_Canad...
- notjulianjaynes 3y agoThey're also a concern in 'the Canada of Mexico'. https://grist.org/abandoned-oil-gas-wells-permian-texas-new-mexico/ https://grist.org/abandoned-oil-gas-wells-permian-texas-new-...
- katbyte 3y agoand the government that already subsidizes oil, is not subsidizing the cleanup by paying for it
- MaxHoppersGhost 3y agoIn the US? Please list some oil subsidies. The only real subsidies oil companies get are the ability to write off certain costs, mostly the capex related to drilling unproductive wells (“dry hole costs”). Hardly a subsidy.
- acdha 3y agoThe tax write offs are significant (see https://iopscience.iop.org/article/10.1088/1748-9326/ac0a10#erlac0a10s2 https://iopscience.iop.org/article/10.1088/1748-9326/ac0a10#...) but most of the subsidies for fossil fuels come from this kind of stuff where the companies are known to be creating problems but will have taxpayers cover cleanup and environmental mitigation, increased healthcare costs, etc. When the government is picking up the cost for damaged houses which can no longer be insured due to climate change, that’s money which should have come from oil & coal companies’ revenues over the half century they’ve known that their products caused global warming but focused on preventing effective action.
- ftxbro 3y agois this what they mean when i hear about privatized profits and socialized costs
- ars 3y agoSerious question: Is it actually necessary to cap the wells? If you leave the machinery sitting on top of the well unused - does it leak anything? Can you just leave it like that?
- iancmceachern 3y agoYes, many of these wells are under extremely high pressures and have more than oil in them (natural gas, methane, co2, etc). It's why you see the cliche scene of pil gushing out the top of a rig when they strike oil. It's not like a water well.
- refurb 3y agoMost of the LA wells were tapped out long ago. None of them are gushing oil.
- iancmceachern 3y agoWhy the specific focus on LA?
- refurb 3y agoBecause there was a ton of drilling and still a ton of oil wells there.
- iancmceachern 3y agoBut there is also a ton in Texas, Oklahoma, the whole gulf coast, on and on. So why just focus on LA?
- refurb 3y agoBecause the article is just about California and the laws around clean up? I have no idea what Texas does and the article doesn't cover it.
- engineer_22 3y ago> It Will Cost More Than Total Future Production to Clean Up California Oil Sites Title is misleading. Please change title to original. Article says the cost to cleanup will be greater than the profit. This is not the total value to the economy, it is the rent extracted by the miners. Since we all benefit from petroleum fuels, maybe it's wiser to compare cleanup vs total value instead of profit.
- bombcar 3y agoThis is an important distinction, $1t in oil could be extracted, with only $10b profit, and the cleanup costs $15b. But the country received the benefit of $1t-15b.
- ThrustVectoring 3y agoThe country also had to pay the $1t in your example. The actual proper analysis is to measure the difference in consumer surplus between the different points on the supply-and-demand curve hit with versus without the additional production.
- imtringued 3y agoSo you are saying oil companies are an arm of the government? I don't know why but a lot of "blind capitalism" reeks of socialism with double standards. After all, if we followed this idea to its conclusion then the US should nationalize the oil industry. Except that isn't capitalism.
- gsk22 3y agoIf you include the costs of pollution and climate change, I'm sure the "total value" of the extracted oil is well in the negative. Either way, there is no reason to let companies off the hook for their negative impacts just because the product they produce has some societal benefit.
- MaxHoppersGhost 3y ago> If you include the costs of pollution and climate change, I'm sure the "total value" of the extracted oil is well in the negative. This is absolutely not true. Oil and gas has lifted billions out of poverty and increased everyone’s quality of life hugely. Especially in “third world” countries where there are no affordable alternative energy sources.
- steve76 3y ago[dead]
- friend_and_foe 3y agoA "first of it's kind study" alongside a thumbnail tailor made to appeal to NIMBYs, literally an oil well across the street from a cookie cutter mcmansion. Do these publications even value their credibility anymore. If it costs more to clean up it will probably be due to the nepotism and corruption with which such contracts are handed out. Maybe let the fossil fuels run from the wells long enough to cover the cost?
- 1letterunixname 3y agoThere were and are oil pumpjacks right smack in the middle of some of LA's and Bakersfield's residential areas. Placentia, Signal Hill, Arvin, Mid-Wilshire, Pico-Robertson, and on and on. There's even a pump jack under "The Tower of Hope" at Beverly Hills High operating until 2017.
- Proven 3y ago[dead]
- imgabe 3y agoWhy compare the cost to the future profits of wells that are just about dried up? How much profit have they generated up to this point and how does the profit it generated in the past compare to the future cleanup cost. Obviously if the well is just about dry and about to be capped and cleaned up its future profit will be very little. Most of the profit will be in the past.
- yencabulator 3y ago> Why compare the cost to the future profits of wells that are just about dried up? If future profits were more than the cost of cleanup, the company might even do the cleanup. Right now, it's pretty much guaranteed they won't (and nobody will go to jail for the this-should-be-a-crime, either).
- imgabe 3y agoJust require the company to pay for it anyway, they can pay with the profits from the past 100 years of drilling oil, or levy a tax on the owners or use some of the taxes California collected over the past 100 years that the oil industry has boosted their economy.
- yencabulator 3y agoThe particular company in question is, without a doubt, carefully organized to have no such funds. https://en.wikipedia.org/wiki/Hollywood_accounting https://en.wikipedia.org/wiki/Hollywood_accounting