"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."
I'm starting to think this may be the Great Filter.
Get a system rolling that allows real costs to be ignored, then combine that with technological advancement that allows for planetary-scale damage and maybe it becomes inevitable that nascent Type I civilizations go back to banging rocks together, at best. It's the same result you get from an uncontrolled paper-clip maximizer, just with a lot more moving parts and flourishes.
“allows real costs to be ignored” Economists call these negative externalities.
There are a handful of movies that involve the biggest tort litigations in the US: Erin Brockovich, Dark Water, A Civil Affair, the Rainmaker. It’s not clear that most of these businesses would exist if the actual cost of negative externalities was displayed on the accounting ledger with a dollar value.
The positive externalities far outweigh the negative ones. Society can't function without cheap energy. It isn't even close, the negative externalities might add up to a couple of years of QoL life lost; and cheap energy enables all the other years. If we taxed based on negative externalities and rewarded based on positive ones oil companies would own literally everything.
This cycloptic focus on downsides is also why we're still largely stuck on 1800s energy technology instead of moving to nuclear. People ought to be using cost-benefit logic to evaluate the power grid.
And yet, France is the country with the most nuclear-generated energy, despite having a tons of state regulation and social push-back to prevent companies to privatize gains and socialize losses.
In fact, water, electricity, the road and internet have one of the best cost/quality ratio have ever seen in the entire world, and I traveled a lot.
France is not a great place to make business, but the quality of life is fantastic.
Meanwhile, the US as a terrible health care system, they have water and electricity scandals every years, your internet has awful value (especially in the silicon valley, talk about irony) and roads are hit or miss.
So yes, the USA are a great place to do business, but touting it has the only way to not be stuck on 1800s technology is a joke.
They are the ones having tasteless tomatoes and $800 insulin, things that were cheap and good less than a century ago.
They are the ones with power outages and polluted water.
We had a war at our border, cutting energy supplies, and last winter, my power wasn't cut even once.
They get a strong winter or summer and their grid dies, plus the public pays the bill.
>France is not a great place to make business, but the quality of life is fantastic.
France is a privileged country from the geopolitical point of view.
I am from Spain, and if you compare it with it has much more water flows, most of the country is plain and easy and cheap to transport things by rail or rivers(without so much mountains in the middle), the soil is rich and is irrigated, and it is in the centre of Europe. It have access to the Mediterranean and the Atlantic. It has warn weather.
I also have traveled a lot. Could you compare France with Morocco or Lybia? China? Russia?
The only country that I personally know that is as privileged as France in the world geopolitically is Argentina. Argentina is richer than France, the political system has lots of similarities and it is an absolute mess.
Other things that you mention has not so much to do with the political system but with History. E.g French, Italian or Spanish people love to eat well, good food, as part of our culture, while anglo saxons in general do not consider eating healthy a priority.
IMHO the political system is France is sh^t, with other system they would be much wealthier. It is very centralised so Paris is very different from the rest of the country. Bureaucracy is so high (bureau is a French word).
What saves France is competition with other systems in Europe when they do crazy stuff like putting a 75% tax on the rich, people can move easily to neighbour countries and their politicians reconsider things.
> The only country that I personally know that is as privileged as France in the world geopolitically is Argentina. Argentina is richer than France, the political system has lots of similarities and it is an absolute mess.
What. Argentina has inflation >100% per year, their currency has a thriving black market to be useable at all, many people stockpile dollars in their homes because the banks won’t give it back, they block exports, etc.
They’re not more geopolitically privileged than the United States, for one, which has the global reserve currency.
> Bureaucracy is so high (bureau is a French word).
~30% of English has roots in French so I don’t think this is relevant. That includes words like legume, but they don’t hold a special place in the nut or vegetable markets. (For fun historical reasons, what English calls legumes is largely associated with nuts but the French word refers to vegetables. This is also true of prune/plum and grape/raisin.)
> The only country that I personally know that is as privileged as France in the world geopolitically is Argentina. Argentina is richer than France, the political system has lots of similarities and it is an absolute mess.
What. Argentina has inflation >100% per year, their currency has a thriving black market to be useable at all, many people stockpile dollars in their homes because the banks won’t give it back, they block exports, etc.
They’re not more geopolitically privileged than the United States, for one, which has the global reserve currency.
> Bureaucracy is so high (bureau is a French word).
~30% of English has roots in French so I don’t think this is relevant. That includes words like legume, but they don’t hold a special place in the nut or vegetable markets. (For fun historical reasons, what English calls legumes is largely associated with nuts but the French word refers to vegetables.)
Can't agree here, France has cca 2x GDP of Argentina, and TBH Argentina is a typical South America mess, could be worse than some neighbors, could be better (ie Chile).
As much as I like bashing France for some weird aspects of their mentality and correspondingly not reaching a fraction of the potential its population has (from somebody living in Switzerland this is painfully obvious anytime I visit, which I do constantly, but Spain doesn't fare better in my eyes in this, in contrary), it is a progressive nation, modern, labor force is smart and effective so they don't need to pull overtimes just to match expectations, relatively (or absolutely if considered globally) rich, stable, with astonishingly beautiful nature - no wonder its year after year the most visited country in the world by tourists. Poor don't just bow down and work endlessly barely surviving, destroying their lives to support rich classes, chasing some pipe dream of emerging as a winner of some absurd rat race if you work yourself to death, quality of life looks different to them (and I agree 100% here, life is too short for that crap).
But yes for opening business its outright horrible place, state is your enemy and if you are above median income, they go after your money without even trying to hide it or act fairly. Somebody has to sponsor that western Europe communism and its not going to be poor burning cars on barricades or blocking roads or city centers. But these are rather just very visible details, overall what I wrote above stands.
"The positive externalities far outweigh the negative ones." I'm simply saying we should transparently price the cost of drilling operations to include end-of-lifecycle operations and we should not allow drilling companies to extract without fronting some part of the cleanup costs. The EPA is already managing thousands of superfund sites because the US legal system for corporations is designed to limit liability and what this article is talking about is liability exceeding all of the profits (which implies the drilling site owners will do some asset-shifting + shell bankruptcy games).
One analogy might be how California requires car drivers to have a minimum insurance to financially protect other drivers in case of collision. Insurance companies already have methods for determining likely risk (eg. a drill site in suburban Los Angeles is much higher risk of negative effects on humans than a rural desert in Texas).
"Society can't function without cheap energy." Prove it. I would argue that society functions fine at the market rate of energy. When you say "cheap energy", I get the feeling you advocate for subsidies, which are just ways to obfuscate that we are all paying more than the number we see on our electrical bill.
"instead of moving to nuclear" It's funny you mention nuclear. I've seen estimates that nuclear isn't cost competitive with other current electric generation if you include the actual cost to build, the insurance required, the likely events (eg. 1-in-100-year weather events), and the cost to safely dispose of all byproducts.
That said, I support nuclear power and wish we (USA) could build it at scale, but away from densely populated regions. I think nuclear is actually cheaper if the negative externalities of oil/gas energy generation (including toxins, carcinogens, and airborne pollutants) are factored into the costs.
> stuck on 1800s energy technology instead of moving to nuclear.
I really feel like your first paragraph refutes your second. Nuclear is a lot of things, but cheap is not one of them. Possibly because nuclear production is forced to account for externalities while fossil fuels aren’t, but it’s not cheap.
Nah, wind and solar are much cheaper, they just aren’t great for providing base load, without some other storage. Nuclear is very good at base load but makes a bad peaker (and is expensive). Gas is also “cheaper” when you ignore externalities, which most places do.
People say "cheap energy" though, and have something in mind. Sometimes they mean things like "our business model assumes cheaper energy than our competitors in country X."
IIRC Japan had a lot of business like that until 1973. All of the major industrial countries did, Japan perhaps the most. Except that although OPEC and the oil shock led to serious problems, the serious problems lasted only a year or so. "Can't function without cheap energy" was true? The dependency was solved so quickly that I find the word "can't" inappropriate.
Who chooses who to bear the negative externalities. Seems like if you're the one who's drilling, you should not be immune to the consequences of the pollution. But again, the ones least well positioned to deal with the pollution are the ones who have to suffer it.
That’s an argument to make every part of the supply chain free.
Positive externalities of free labor far outweigh the negative externalities. We shouldn’t have to pay for labor.
Positive externalities of free capital far outweigh negative externalities. We shouldn’t have to pay to get capital.
And so on and so forth…
If this $21Bn was split over the many gallons of oil extracted it wouldn’t have ended oil extraction or the growth of the economy. It would have simply priced it better, which would have meant alternatives that didn’t impose such negative externalities would have been competitive sooner.
You don't seem to understand the concept of externalities at all.
>If we taxed based on negative externalities and rewarded based on positive ones oil companies would own literally everything.
Negative externalities are costs that you inflict onto other people without compensating them. Positive externalities are benefits third parties receive without paying for them.
This means we already reward oil companies by letting them have free stuff and letting them monetize that free stuff. This is at the expense of all the people who weren't born into free stuff. We live in a world where "Oil companies already own literally everything" to a large extent.
If you have monopoly rights to a positive externality as a third party (e.g. extraction rights to oil), you get to charge for the full surplus, essentially making it so that it doesn't matter whether the positive externality exists or not for the rest of the economy. Privatizing a public externality as a third party is as simple as selling it.
Taxing CO2 cuts into the monopoly surplus and leaves less profits for oil companies. That is the defining feature of pigovian taxes. If we assume a reduction in income taxes, then the dead weight loss of income taxation shrinks and we get less income inequality.
>If we rewarded based on positive ones oil companies would own literally everything.
The producer of the positive externality of oil is a collaboration between plants accumulating carbon and the earth's crust compressing it into oil. You could also call the producer of this externality "the environment".
This means that if we wanted to reward the environment for its good positive externality producing behaviour, we should stop destroying it globally.
You appear to be under the misconception that the third party benefiting from the positive externality also produced the externality. E.g the oil company gets an income from oil, therefore it also produced the oil via photosynthesis and compression according to the neoclassical productivity hypothesis. This is not case by definition, rewarding the production of positive externalities would not reward oil companies, because they didn't produce the positive externality, they just extracted it.
> Instrumental convergence is the hypothetical tendency for most sufficiently intelligent beings (human and non-human) to pursue similar sub-goals, even if their ultimate goals are quite different.[1] More precisely, agents (beings with agency) may pursue instrumental goals—goals which are made in pursuit of some particular end, but are not the end goals themselves—without ceasing, provided that their ultimate (intrinsic) goals may never be fully satisfied.
> Instrumental convergence posits that an intelligent agent with unbounded but apparently harmless goals can act in surprisingly harmful ways. For example, a computer with the sole, unconstrained goal of solving a difficult mathematics problem like the Riemann hypothesis could attempt to turn the entire Earth into one giant computer in an effort to increase its computational power so that it can succeed in its calculations.
> Suppose we have an AI whose only goal is to make as many paper clips as possible. The AI will realize quickly that it would be much better if there were no humans because humans might decide to switch it off. Because if humans do so, there would be fewer paper clips. Also, human bodies contain a lot of atoms that could be made into paper clips. The future that the AI would be trying to gear towards would be one in which there were a lot of paper clips but no humans.
Though I disagree: the AI in this analogy is mindless, it's up to the controlling entity with agency to stop it or program it to stop at some point. Just like we humans have agency and could decide to stop exploiting our planet's resources until we can do it without destroying it. How that decision is made and implemented is another debate.
I wonder if this is the reason for philosophical/religious shifts in history. Eg axial age ideas of loving your neighbour/all being one reduced conflict which allowed the social cohesion needed for large complex societies to be stable enough to survive.
I think we will need a similar shift in the modern age. Some religious/philosophical movement with a morality which makes waste and pollution sinful/shameful for environmental protection. I also think a ‘liturgical’ epistemological system is needed to reframe ‘truth’ and the value in reason. In this way absurd situations like ignoring externalities could be considered sinful rather than the status quo where most people do not care that these things don’t make sense.
This is kind of a reaction to hyper-individualism and cynicism, which I think is the reason for most modern problems. When people do not see themselves as part of a whole, they become their own god and stop caring about the commons. Apathy becomes the default.
TLDR: we need a cultural shift where people have greater respect for the environmental/intellectual commons
> axial age ideas of loving your neighbour/all being one
Sounds like the 90s. The world coming together in a return to “nature” was the hip thing back then - from what I heard and experienced as a teen. It can be seen in media of the era like Return To Innocence by Enigma. It was mostly superficial though - there was no real deep engagement with other cultures; else they would have seen the incompatibilities and experience the “clashes” we see today.
> than the status quo where most people do not care that these things don’t make sense.
I don’t think people are “OK” with things not making sense. I think most people feel the world makes sense to them. However each person’s internal model of the world is probably very different from each other’s. We no longer share a “common reality” as much as in the past.
I like John Vervaeke's framework for this. He prescribes an 'ecology of practices' that help us develop 'spiritually'/psychologically. The missing ingredient is a moral system and an overall structure. Many small groups are currently creating 'modern' religions, so it is up to those of us who are interested to participate, learn and help create the systems we want to see.
I think we also need a lot more study of religion and spiritual ideas to identify useful methods to teach philosophical/moral/psychological systems through scripture/rituals etc. There are many low-hanging fruit. Meditation is one such concept that has only recently become scientifically accepted in the west. Once it was well-researched it moved from 'alternative' to 'mainstream.' Most modern people are very skeptical of unstudied practices. In the same way we can re-frame behaviors such as 'prayer' and 'rituals' so they are not dismissed by a skeptical audience.
We went from a hundred million to eight billion in less than two hundred years. It is only relevant for the next 80 years.
Birth rate only determines the time it takes to go from one population number to another, it doesn't change the fundamental problem of carrying capacity. The carrying capacity of Earth is a trillion times higher than Mars. That isn't even enough to let a single human live on Mars.
If you exceed the carrying capacity on Earth all you get to do is send people to die on Mars instead.
The big filter in terms of population is our ability to terraform other planets and since terraforming takes thousands of years, staying alive on earth with stagnant birth rates is an important part of it until the terraforming is complete.
> The big filter in terms of population is our ability to terraform other planets and since terraforming takes thousands of years, staying alive on earth with stagnant birth rates is an important part of it until the terraforming is complete.
I think this is actually very crucial, and something too few people appreciate: We need (or will need, at some point; the carrying capacity of the Earth is actually quite a bit more than 8-10 billion, we just need to be better about distributing resources) to keep population from continuing to grow forever on Earth until we have reliable means of colonizing other planets.
This also means we need to avoid getting too far in life-extension/physical immortality research before then! If we can actually achieve physical immortality, but we're stuck on Earth, at some point we will have three choices: stop having kids, start killing each other off in significant numbers, or start running out of resources.
(That is, of course, entirely separate from the concern that life-extension treatments will only be available to the very rich.)
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.
Because such a rule would be far too vague (is, easy to subvert by special interests). Sometimes you have to do things the hard way, with long and detailed laws passed by legislatures and updated to account for technological developments.
When it comes to oil wells, Pennsylvania has a law for that: The Oil and Gas Act of 1984. A lot of wells are still just abandoned¹ by companies (in the usual ways companies shirk responsibility).
are 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.
In fairness, the corruption that led to PG&E accidentally burning down a city every few years occurred back in the 70’s, so those people are retired / dead, and the statute of limitations applies.
We don’t know how many people their current blatant and widespread corruption will kill, so I guess we’ll need to wait and see, then prosecute the responsible parties in 50 years.
should there be a statute of limitations on ecological catastrophe? that seems like it would strongly, and perversely, incentivise cover-ups and other nefarious weaponisations of information asymmetry against the interests of the commons.
This sounds nice, but I'm struggling to imagine how it will be effective in practice. Could you offer any elaboration?
> These changes undoubtedly reflect a more progressive view of regulation. Yet, they do not jettison cost-benefit analysis. Instead, they have a basis in recent academic research, and they appear to be designed with an eye toward helping agencies withstand court challenges to their cost-benefit analysis.
As I understand it, a cost benefit analyses did not factor into the recent supreme court ruling against the EPA, nor the one from last summer.
that is big news. even as a really online person i didn't see that. though it's an executive order so it's not going to stand up to the next republican president whenever that is unfortunately... though if that comes to fruition with how it's trending we are not going to need to worry about negative externalities and environmental assessments. I do hope you are right that it's a big win in the long run but i do feel jaded.
Not adding much except maybe a tiny signal boost: capture.
Capture is the root of all evil in the way that various ancient/sacred texts said that “money is the root of all evil”.
President Truman was so poorly compensated by capture that they both increased the salary and created a pension because of how embarrassing it was that a President suffered personal financial hardship.
We don’t worry about that sort of thing these days.
Fwiw, the quote is actually “the love of money is the root of all kinds of evil.”
Essentially greed. If you really boil the root of evil down to its base, I think you’ll find pride is the true root. IMO pride is the root of greed itself too.
This is kind of funny because Keynes' liquidity preference concept can be loosely translated into a "love for money" but it is about not wanting to let go of money rather than earning it.
How 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.
I used to think so, but they badly embarrassed themselves on a COVID origin story a few months ago. They relied on a single source who claimed to have unique expertise in translating ambiguous Chinese Communist Party language. Most commentators with knowledge of Chinese language and politics criticized his interpretations heavily. A decent review of the events is here: https://www.semafor.com/article/10/31/2022/pro-publica-scram...
In one particularly disturbing case, their translator stopped midway through a sentence, omitting the remaining half of the sentence which completely changes the interpretation.
ProPublica's editor note on the criticism said they asked for independent translations, but contains no support for their article except that the translators found their translation "plausible". The lack of detail is to me pretty telling. https://www.propublica.org/article/editors-note-a-review-of-...
The Semafor article just reports that the Propublica story is being reviewed, with the review being later published in the editor’s note which you linked. Do you have any reputable sources that criticize Propublica’s response as being inaccurate?
That's an inaccurate summary of the Semafor article, and also omits the Fallows Substack, which is authored by a veteran reporter who interviewed a veteran translator and published his comments in full.
Both the Semafor article and the Fallows Substack report on many Chinese translators who found the translations in the ProPublica article incorrect and misleading. The ProPublica editor note engages with none of their criticisms directly, and only states that they found some translators who all declared their translation "plausible", and that some of the translators agreed with or considered acceptable some particular points of their translation. They make some corrections and acknowledgments of ambiguity and missing context, but without any meaningful discussion of the impact of these changes on the article.
Regarding that, I think it is revealing that the biggest revisions in the story, including a full new paragraph pointing out translation ambiguity with a link to the editor's note, are concentrated in the first few paragraphs of the story, where the "bombshell revelations" are typically broken.
Fallows notes that some of the most problematic aspects of the story went entirely unanswered:
> Why did you dismiss the issue of virtually identical language found in a Communist Party document many months before the alleged “lab leak”? Did this issue come up in the editing process? How was it resolved?
All this said, I agree with Fallows that ProPublica is still very much worth reading, and that it's just unfortunate they won't frankly acknowledge some shortcomings in reporting on a topic that Western sources are inevitably going to mess up. Even in this story, ProPublica deserves credit for transparency, disclosing its original sources in a way that allowed outside critics to quickly and easily reassess them.
Which ProPublica articles would you claim are most inaccurate?
[EDIT: if you're only referring to the 2021 "CEOs living off loans against unrealized CG", see my comments below. Any other set of articles? I've seeen some quality work from ProPublica on e.g. the US justice system. You'll never see that from Forbes, or Cato, or Heritage Foundation, or AEI.]
There'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.
The secret here is they only investigate the things that support their narrative. In this article they actually explicitly stated they're looking to cover a specific list of negative things associated with the industry. They would not, for example, publish an article about how much lower our standard of living would be without the industry. Or to attempt to weigh the positives adjust the negatives of the industry.
So you can always publish "gold standard" journalism and yet still present a distorted version of the truth.
So you can get information from multiple well researched sources. This is one of them. Don't expect anyone to do all the work.
"You're not publishing full investigative journalism articles on absolutely everything." is not a valid criticism of your article, or a reasonable criticism of the publisher.
Yes, this type of criticism is baffling and, frankly, a bit morally outrageous.
ProPublica can't be expected to do all the work of uncovering all sides of the truth. They already do the hardest work: uncovering what the powerful would rather that we not know. They do enough; what are the rest of us doing?
I would agree that it's historically been uncommon for the media to give balanced perspective on civilizational progress, but some good sources for this have emerged in recent years. One of my favorites is Works in Progress magazine: https://worksinprogress.co/
I mean in that case there is nobody engaged in journalism! You choose what you cover, and who you interview, and how much you spend hemming on a source's claims, etc etc etc.
It's a lot easier to think about journalism as the result of human output that is indeed biased towards certain ideas, and to then read from various things, look into things yourself, or reading things from outlets that you believe have your interests at heart.
Expecting one group to collect all the info and present a pro/con list is gonna be very hard, but if you just check out a handful of outfit's coverage on something you might get a good enough picture to apply some judgement.
The motte: nobody is perfectly neutral, so no journalism can be perfectly objective. (true)
The bailey: it is normal and reasonable for journalists to present a biased narrative without even attempting to find or mention relevant information that would contradict it. (false)
Objectivity is an ideal that, while impossible to perfectly achieve, can certainly be done better or worse, and is important for journalists to think about if they want the trust of the public.
I only really see this as a relevant objection if the "omitted" information is such that it distorts what is actually presented. Is that the accusation? Or are they "biased" because they didn't publish this next to a counterpoint about how wonderful internal combustion engines are?
Emotional manipulation by only presenting a view which aligns with your desired policy outcomes — but not the contrast, eg that ICEs enable modern farming — is classic propaganda technique.
I'd add manipulation by picking phrasing you want to though... Like "ICEs enable modern farming". Machines/vehicles are one of the things that enable modern farming, it's ICE that's currently the most common power source for them - but ICE is just one implementation of it and can be replaced.
Why does an investigative reporter need to tell me that fossil fuels can be used to operate a tractor? We knew that already. No investigation is required.
the actual secret is that this misguided line of reasoning is unfortunately abused by those who wish to suppress arbitrary journalism they dislike, or the concept of professional journalism in general, because as you say, such criticism would mean journalism doesn't actually exist
I mean that's just plain false. Think of how much time any one meaty investigative report takes; nobody has the time or resources to then turn around and carefully make sure they do some sort of counterbalancing expose that's somehow pro-industry (and what's the point of an expose? They employ many PR people for that purpose anyway).
You don't need to take their comment seriously... After all they didn't make the counterargument and therefore it's a overly biased point and thus not useful in any way.
That's why as an individual you're supposed to get your news from multiple high quality sources, each with their own biases and slants, and then you make your own conclusion. I realize most people only want to read news that supports their already held beliefs though.
> You’re not engaged in journalism if you only investigate and present a narrative which aligns with your policy preferences.
where did you hear this silly rule? It sounds like something a child would make up when they don't want to hear something
>they don’t overtly lie or fabricate data to support their case... that’s true of many propaganda outfits.
another thing which is true of "many" propaganda outlets is they don't literally give you cancer, and that is an observation exactly as discerning as yours, because they are both also true of "many" truthful media outlets
if you have an issue with the specific article, or the facts alleged within, that's one thing, but the facts not reflecting well on your viewpoint and you being upset they aren't reporting other things which would make you feel better, is not a criticism of them
I feel that the "pro-"extractive industry side of things has so much obvious monetary incentive behind it that it isn't really necessary to worry about independent reporters not adequately presenting it.
The whole article is about what would happen without the California oil industry: it would cost the people 21.5 billion dollars to clean up the industrial operations of that industry.
They wouldn’t in the case of California oil production because it’s long past peak and would have little impact if it went poof.
In general, these companies have made enough money that they are insulated from any meaningful punitive action. “Polluting Oil Well 32668 of Los Angeles, LLC” will go bankrupt if sued and disappear once it becomes untenable.
That’s no secret, and being the HN Lorax for oil extraction is both bizarre and a futile effort - the die is cast, and taxpayers will be stuck with the bill.
Not the US, but I gained some insights into the legal treatment of industrial polution in Germany after working at two chemical companies. Over simplified, the last one to turn the lights off in a certain industrial site is stuck with the bill of cleaning up the mess. Decades upon decades worth of mess. Those sites are, by now, multi user sights, it is the users who are responsible for clean-up and costs, not the site owning entity.
The result is, some of the sites are kept at minimum operations just to avoid the tremendous shut-down costs.
Avoiding those costs by spining the operations off doesn't really work. The new entity would have to take the risk of shut-down costs, if it is clear those cannot be covered from the get go, it is the original entity that is in the hook. So, worst case, e.g. 3M wpupd have to declare bancruptcy. One common work around is to push those outdated operations down to other cheap skate companies, e.g. from Asia, who can buy them, including clean-up liabilities, for a symbolic price. Then they extract whatever value is left, before reselling it again. As long the overall site, or rather park, is operational this works. Which is bad for the last operator left, he risks being stuck with the bill.
By the way, those costs for clean up are accounted for as potential liabilies in the balance sheets of operating companies. Just putting everything in seperate legal entity, and letting that one go bankcrupt, doesn't really work. Which is a good thing, IMHO.
I’m sure that’s the case, but wouldn’t the courts be able to seize the relevant land in that case, too? Or pass some special blanket law stating any site that requires the government pay for clean up reverts to public (government) ownership?
At least in that case the government gets a lot of land back that can be sold for solar farms or, in higher density areas like Los Angeles, developed into higher uses like housing+parks?
Skipping oil and going to power generation, you have the same thing. Spin off the power generator, leave it with no money, the land has negative value, go bankrupt. This has happened in Oxnard for example, and the city is trying to not have it happen again (good luck).
One 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.
That's why you should be reading outlets for opposing sides, to get the best arguments for each side.
But if one side doesn't bother to mount a defense or do their own individual research, and resorts only to dismissing the other side based on the fact that it's "the other side", they aren't doing themselves any favors.
Reading both sides is itself a bit of a fallacy. Most problems don't fit neatly into two 'sides'. For example, take gun control -- typically associated with the liberal wing of the democratic party, and opposed by most of the republican party. The leftist wing of American politics, however, is often opposed to gun control. Organizations like the Socialist Rifle Association and John Brown Gun Club and Pink Pistols.
In the case of environmental review, there's also a multitude of different perspectives with different objectives. From indigenous groups whose land was (typically) stolen, to anti-oil activists, to pro-business democrats (like Biden/Clinton) who want to keep profits rolling at the expense of pristine wildlands, to the various concerns of the right. I know plenty of republican folks who are religiously compelled to take care of the earth and oppose oil drilling. I know plenty of republicans who believe that anthropogenic climate change is "impossible".
Quite frankly, it's not wrong to read a few viewpoints, or read only the viewpoints you agree with and just acknowledge there are other viewpoints. Just don't get lost in believing your viewpoint is the only reasoned one.
The same Propublica that decided to treat unrealized gains as income and then ran a plainly ludicrous story about how the rich were paying a true tax rate of 0.1%?
In an article titled "How the wealthiest avoid income tax" they sneakily changed the definition of income to include paper gains on assets not yet sold, and then represented the fact that taxes aren't paid on non-taxable events as a method the rich use to not pay income tax. It was a complete miscarriage of journalistic ethics. They lied to their readers to advance a political narrative.
You're referring to the tactic where billionaires can live off loans against their unrealized capital gains (e.g. stock with appreciation/dividends). Which goes back
to the US case Eisner v. Macomber (Stock Dividends are Not Taxable) (1920). But it also goes back to CEO compensation in general, and in stock in particular, being abnormally high. It is not tax-effective for the proverbial Google chefs to do this, only a tiny group.
A dictionary definition of "Income" is "money received, especially on a regular basis, for work or through investments". It's not just the narrowest definition, e.g. "only the thing that appears in the Income box on your [US] tax form, under the latest revision of the US tax code". (Like when Mitt Romney in 2012 accidentally shone a spotlight on
"carried interest" which allows private equity managers to pay only 15% tax.)
If your unrealized CG is so high that you can live off the loan until you die or retire, then it semantically isn't really a loan, is it.
When US CEO compensation becomes so excessive that it means that something that originally meant temporarily deferring tax in the 1920s now means deferring essentially all income taxes for most of their working life, it does suggest things have gotten distorted.
Sure ProPublica should have been more accurate and said "Here's stuff that is functionally equivalent to income, yet isn't taxed". But if you want to argue that ProPublica isn't entitled to is own semantics, then neither are other people in that debate. For example, we'll probaly see more scrutiny that Clarence Thomas (and his mother) were clearly receiving multiple streams of undeclared "income" or benefits from Harlan Crow. Also allegedly a complete miscarriage of ethics. (Yes that's currently primarily an ethics scandal not a tax evasion one, although it might become that too).
By the way, Warren Buffett essentially made the same point as ProPublica with his famous 2011(?) wager about CEO's secretaries' tax rates being higher. Noone accused him of a complete miscarriage of ethics.
Apparently the US tax code is even worse than that [0]. How is this not generational tax avoidance:
> Capital gains taxes on accrued capital gains are forgiven if the asset holder dies—the so-called “Angel of Death” loophole. The basis of an asset left to an heir is “stepped up” to the asset’s current value.
(Cue the panicmongering 'divide the family farm' story. Obviously Congress and the IRS can't figure out different treatment of stock, real estate, investments, farms.)
If it is in your interesst to not understand a problem, you don't. In that case, failing to grasp how stocks, real estate, farms and investments are different things is an easy excuse to keep a convenient loop hole open.
>If your unrealized CG is so high that you can live off the loan until you die or retire, then it semantically isn't really a loan, is it.
It is, because it gets paid back. What a stupid fucking line to draw “loans” and “not loans” at.
Do you consider people who take out mortgages that don’t pay them back before they die to not be taking out loans? Because that happens all the time. My father took out a 30 year mortgage when he was 84. F
The ultra wealthy can borrow vs. holdings at close to prime, which was basically zero when that article was written. So, they could take out a multi-decade 0% “loan” secured by stocks held at the same bank, and then pay it back, interest free after decades of inflation, and after decades of appreciation on the underlying stock portfolio.
Of course, at that point, they could pay the loan off by borrowing more against their portfolio. In this way, they can recursively never pay tax on the money they received (and spent) in exchange for “not selling” it to a financial institution that will no longer let them withdraw the collateral.
If:
(1) your father’s mortgage was used to pay off debt by using existing real estate holdings as collateral
(2) where the holdings appreciated significantly over the lifetime of the previous loan,
(3) the previous loan was collateralized by other real estate holdings,
(4) he then re-mortgaged a small fraction of those holdings to generate free cash flow for personal use, and
(5) this strategy only worked due to the bank giving him loans significantly below market value, due to other considerations regarding your father’s impact on the bank’s broader business,
Then, no, I wouldn’t consider that set of financial transactions to be a loan.
Of course they have an anti-fossil fuel industry bias because they write an article against the fossil fuel industry. One should listen to an unbiased source, i.e., a source that never writes anything against the fuel industry.
It would be great if we could hire an unbiased source to study the issue and determine what the cleanup costs of California oil production will be. But there is a danger that that unbiased source will determine that the cleanup costs will indeed be high and then they will immediately become a biased source, not to be believed ever again. And we will have wasted our money.
'That's some catch, that Catch-22,' he observed.
'It's the best there is,' Doc Daneeka agreed.
Oh, even better. Find a source with a strong pro-fossil fuel bias. And see what happens if their results show the same thing. Case in point, global warming and those oil industry internal reports showing global warming to be true, and man made, since the 70s.
In 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.
The tax write offs are significant (see 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.
If you want to say what you think is important about an article, that's fine, but do it by adding a comment to the thread. Then your view will be on a level playing field with everyone else's: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
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.
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.
> 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.
Fossil fuels have certainly helped improve the lives of billions. At the same time, the negative impact can't be overstated, and only gets worse with time (the more the climate changes, the higher the future cost).
Additionally, oil extracted in California for domestic consumption doesn't affect third world countries, so it's irrelevant what positive impact it might make halfway across the world.
I feel like manufacturing the collapse of the very ecosystems that sustain our civilization might be a steep price to pay for a short moment's increase in living standards. But i guess as long as we're all dead before the time to repay the debt comes, we can pretend like we're self-made millionaires and not living on borrowed money?
If the benefit of burning carbon exceeds the costs associated with burning carbon then people will burn CO2 and society will get wealthier.
If the costs exceed the benefits, then society will get wealthier simply from stopping self destructive behaviour.
Amazing right?
Except we don't charge the full cost of the negative externalities so oil companies cause a lot of damage because they are under the mistaken impression that their current extraction rates are useful to society.
The reason why we care about the negative externalities of fossil fuels is that they are most likely permanent but the benefit is temporary. So the cost benefit analysis tells us we are burning too much and this ends up harming us actually and it is just that we haven't experienced most of the harm yet.
This 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.
The 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.
So 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.
Why 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.
> 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).
Just 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.
If 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.
No, 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.
Yes, 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.
Most 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.
Does 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).
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.
The 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.
Except 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.
> The rest of your comment has no relevance to the topic at hand.
My comment, much like credibility of "expert" testimony in a trial, has to do with large scale failures of so-called expert governance in California.
I'm sure all of the embarrassing failures I mentioned had plenty of citations, just as I'm sure that the decrepit weirdly-fancy-for-a-third-world-banana-republic of San Francisco had reams of highly-remunerated research around their policy innovations on homelessness. Problems which in other far more boring cities were, if not solved problems, managed well due to common sense.
A "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?
Sounds like they've solved the problem already.