Barley Literate: Energy company profits are simply theft

Monday, August 17, 2015

Energy company profits are simply theft

If fossil fuel energy companies actually paid the true economic costs of their business, they wouldn’t be profitable.

Another way to say this is: Big Energy is making big profits because it isn’t paying the pass-along costs of global climate change. You’re paying these costs, and your grandchildren will pay them, too.

The pass-along costs are what economists call the “external costs” of producing energy, namely, the dreadful and rapidly worsening impact of greenhouse gases and global climate change and global warming. The energy companies largely escape paying for this environmental damage. That means that somebody else—everybody else—has to pay for it.

Every person in the world and every business and every government is paying these costs, in addition to buying coal and gas and electricity from fossil fuels.

Some basic data has been analyzed by the International Monetary Fund and by the University of Cambridge, click here.

Think of the payment of these external costs as a global subsidy to the energy companies. The IMF estimates the magnitude is more than $5 trillion per year.

The folks at University of Cambridge calculate that coal companies, for example, pass on such economic costs to society that are 200-900 percent higher than their reported profits.

We need a worldwide tax on carbon emissions, paid directly by the companies and consumers that create and benefit from them. We need it now, because we're cooking the planet.