The wildfires scorching the region around Los Angeles are likely to be the most expensive in history. But, future climate change-related disasters will certainly top them in cost. Here are some steps…
I fail to understand why they stick with fossil fuels even though renewable deployments are cheaper than ever. Although there’s misinformation and politics, they should look at long term profits…
Sunk cost fallacy.
They have already invested so much in fossil fuel infrastructure that they feel that if they give up now, they would have wasted all their money.
The fact that that the money is wasted whether they pivot to renewables or not something they consider.
In fact, if they can lever their existing infrastructure they can be much more competitive than any new renewable energy provider.
That cheapest new energy is solar then wind gives the oil company a negative impact on its existing assets. Suppressing renewables through bribery/politics keeps consumers addicted to their product, and keeps prices high. Nationalizing oil companies, without compensation for shareholders, is both appropriate punishment, and only way to stop their lobbying corrupting democracy.
Many fossil fuel companies, especially ones involved in the middle east petrostates gain huge oil rent from selling oil.
Basically, the price of oil is close to the price of producing it in the “marginal” fields (the least productive fields), while some oil fields are many times more productive than the marginal fields. The owners of the hyper productive fields gain huge amounts of revenue from selling oil (this is called “differential rent” in economics). And this profit comes from owning the oil fields themselves.
If the demand for oil were to fall, its price would fall quite rapidly, as oil producers would abandon low productivity marginal fields. This would torpedo the oil rents of the petro states
This rent effect exists for lots of goods, but it is more pronounced in oil because oil is a scarce natural resource that is spread very unevenly.
On the political side of things, the oil rent of the big producers is protected by the US government, because the oil rent of the big producers is what holds up the value of the USD.
Unfortunately, I have to second this statement. I think humans just can’t anticipate well. In combination with money, a rare event will be neglected or ignored. Think of IT security or pandemic countermeasures for example.
I live in Germany. Europes devil is water. Lots of water from the sky. Rain the volume of an entire year within 2-3 days.
In 2021, in a hilly area many small villages were washed away from a used to be small tiny river. Did people learn? No.
Since that event, we had several more heavy rain events in Europe that either flushed town or drowned entire areas. Last one this summer in Spain Castillia.
Do people learn? No, still the right-wing parties in Germany are on upswings. And so the Governments.
I fail to understand why they stick with fossil fuels even though renewable deployments are cheaper than ever. Although there’s misinformation and politics, they should look at long term profits…
Sunk cost fallacy. They have already invested so much in fossil fuel infrastructure that they feel that if they give up now, they would have wasted all their money.
The fact that that the money is wasted whether they pivot to renewables or not something they consider. In fact, if they can lever their existing infrastructure they can be much more competitive than any new renewable energy provider.
If you depend on oil companies for “rationality”:
That cheapest new energy is solar then wind gives the oil company a negative impact on its existing assets. Suppressing renewables through bribery/politics keeps consumers addicted to their product, and keeps prices high. Nationalizing oil companies, without compensation for shareholders, is both appropriate punishment, and only way to stop their lobbying corrupting democracy.
Many fossil fuel companies, especially ones involved in the middle east petrostates gain huge oil rent from selling oil.
Basically, the price of oil is close to the price of producing it in the “marginal” fields (the least productive fields), while some oil fields are many times more productive than the marginal fields. The owners of the hyper productive fields gain huge amounts of revenue from selling oil (this is called “differential rent” in economics). And this profit comes from owning the oil fields themselves.
If the demand for oil were to fall, its price would fall quite rapidly, as oil producers would abandon low productivity marginal fields. This would torpedo the oil rents of the petro states
This rent effect exists for lots of goods, but it is more pronounced in oil because oil is a scarce natural resource that is spread very unevenly.
On the political side of things, the oil rent of the big producers is protected by the US government, because the oil rent of the big producers is what holds up the value of the USD.
Unfortunately, I have to second this statement. I think humans just can’t anticipate well. In combination with money, a rare event will be neglected or ignored. Think of IT security or pandemic countermeasures for example.
I live in Germany. Europes devil is water. Lots of water from the sky. Rain the volume of an entire year within 2-3 days.
In 2021, in a hilly area many small villages were washed away from a used to be small tiny river. Did people learn? No.
Since that event, we had several more heavy rain events in Europe that either flushed town or drowned entire areas. Last one this summer in Spain Castillia.
Do people learn? No, still the right-wing parties in Germany are on upswings. And so the Governments.
Tldr. Most people are stupid
Kremlin propaganda (in various ways, sometimes in free natural gaz) isn’t to be forgotten.