Climate Change

"Climate change is a long term problem, but all the evidence suggests that if we delay and do nothing the costs of responding will grow and could be damagingly high." [BP]

While ExxonMobil continues to deny it, the European companies Shell and BP are converts. Their leaders are now strong public voices calling for Government action. This is not as surprising as it may seem. These are intelligent, well educated people who clearly understand the science and see how serious the issue is.

However, for their company to act, they want (and need) a clear market based mechanism. Clearly they prefer incentives and emissions trading schemes which can be to their benefit, but they must have clear long-term decisions so that they can alter their strategy and investments accordingly.

"We need a framework in which to invest and operate, and we need the right incentives to be in place. We need an open trading environment in which capital and technology can move easily in response to need. Only Governments can create that environment." [BP]

"The emissions trading system being developed by the European Union is a good step in that direction. So are the initiatives being taken in different parts of the United States." [BP]

"And we need the pattern of incentives which stimulate the research and innovation required to reduce the environmental risks at the lowest practical costs. Only Governments can set those incentives." [BP]

"Scientists weren't alone in calling for action. Here in the UK, business leaders - including from Shell - have advocated a more effective goverment policy framework" [Shell, Malcolm Brinded]

I think the oil companies are actually frustrated by the slow progress of Governments in the US and especially the UK to select a market based framework they are going to adopt to respond (inadequately) to climate change. While there are attractive options for the oil companies, the Government could also adopt more aggressive options including carbon taxes to divert more oil revenue to investment in renewable energy.

Corruption and Africa

"We believe that is about transparency and about providing direct support for the development of local capacity, starting with education. The gains from oil and gas production can and should be hugely beneficial. But we can't assume that those benefits flow automatically. They need a helping hand. That's why we have adopted a policy of transparency, publishing what we pay in the areas which are part of the Extractive Industries Transparency Initiative. That is making good progress and we are delighted with the support we are getting from Governments and state companies." [BP]

The oil companies have helped to create an intractable mess in Africa. But it is not simply the greed of oil companies that is to blame. Through National Oil Companies, African Governments are generally the largest partners in oil and gas operations. In the face of protests or public opposition, it does not require underhand tactics from the international oil companies for the Government to respond aggressively. In many cases the Goverment itself has the most to lose, and they do not have to worry about international consumer boycotts. Often the oil companies are not able to criticise Goverment actions, for fear of losing their lucrative production contracts.

The oil companies have tried to claim they are in a 'hands off' position and should not get involved in politics. When it comes to distributing oil wealth or when public opposition arises, they claim it is for the Government to decide and resolve. This approach is a little naive, especially when the activities of those companies carry such a huge influence.

The 'Extractive Transparencies Initiative' is a step in the right direction, but it is several decades too late.