Essay on "Strategy and Policies of the Oil Industry in Responding to Global Warming"

Essay 11 pages (4060 words) Sources: 8

[EXCERPT] . . . .

Strategy and Policies of the Oil Industry

Over the last several decades the issue of global warming has been increasingly brought to the forefront. Part of the reason for this is the changes in the environment that are being seen around the globe worldwide. A good example of this would be the in the North Pole, where during the summer the polar ice caps are melting at a faster rate every single year. Where, a study conducted by the Danish Meteorological Institute found that within ten years the Arctic will be ice free during the summer months. (Terril 2010) This is problematic because the ice is warming based on a phenomenon known as global warming. Simply put, the overall amounts of emissions that are released into the atmosphere (from cars / trucks / factories) contain carbon dioxide. This interacts with oxygen in the ozone layer, (which protects the Earth from the ultra violet rays of the sun) causing it to deplete. As the Earth is becoming warmer from these rays hitting the surface, this has meant that dramatic changes are occurring in the environment (such as the polar ice caps melting). As a result, many scientists and environmental activists have been calling for a shift in the way energy (oil / natural gas) is produced and consumed. Where, many of these environmentalists will claim that the various large oil companies should be engaging in strategies that will help effectively respond to the changes that are occurring because of global warming. To fully understand how the oil industry has been responding to these calls requires a careful examination of: the polices that were used in the past, present and possible future. Together these different elements will highlight how the oil industry is responding to the various challenges being presented by global warming.

Most Common Strategies of the Past

When you talk about the most common strategies that are used in the past, it is important to note that many industry groups and trade organizations are still embracing one basic principal, deniability. This is where the various players within the industry will question the overall science of what is taking place. As they will often cite various statistics and information that they have collected through equally qualified scientists to show that they are not the culprit. A good example of this can be seen with Exxon Mobil, where a report released by the Union of Concerned Scientists highlights this campaign of disinformation. According to the report, the company spent $16 million between 1998 and 2006 on funding 43 different lobbying groups, with the intention of causing confusion on the issue. (Scientists Report Documents Exxon Mobil 2007) This is significant because if the company can be able to create confusion on the issue, they can slow any kind of regulations that may hurt their bottom line.

Yet, when you look further at what is taking place, it is clear that this policy is continuing to be utilized as a way to scare the public about the issue. Meaning that if the big oil companies can create fear about sharp increases in energy costs by such actions or seeking to reduce / limit various laws, they were successful in achieving their objective. An example of this can be seen in California, where they have imposed regulations that will require all of the major oil companies to reduce the overall amount of carbon that they are emitting into the atmosphere. However, the oil industry has been continuing to support those groups that are opposed to this law. Where, they recently provided such organization with a $930 thousand cash injection. This is designed to help to promote gathering enough signatures on the ballot, that the law could be over turned by the voters. Commenting on what is taking place Oxydental Petroleum spokesperson, Richard Klein said, "Implementing this law in the teeth of the most significant recession in the last 60 years would be foolhardy." (Roosevelt 2010) This is important because it underscore the overall fear tactic that is used to sway opinions on the issue. Where, the large oil companies will claim that the various environmental laws will cause prices to rise sharply, as they have added expenses in following the new regulations.

To Drill or Not to Drill

The solutions that big oil companies have had in the past has been to increase the overall amounts of drilling that would take place. The idea was that they have the technology to extract and transport oil from proven reserves to various markets around the world. According to these companies, the ability to effectively locate and extract the oil / natural gas from the various field, will ensure that there is enough supply to meet demand. This will keep prices low, by ensuring that there is an adequate amount of supply on the market. As a result, there has been a push by the industry to increase the amounts of drilling that are allowed in areas, such as the continental shelf. The problem is that opening the various parts of the continental shelf to oil / natural gas exploration, inevitable environmental damage that would occur. Where, environmentalists claim that it could damage many different areas of habitat (used by the wildlife). A good example as to how heated the issue has become can be seen with President Obama's decision to open up part of the Atlantic Shelf for exploration. This is a challenging decision because you have those politicians who support the ideas of unlimited drilling and are pushing for a removal of these restrictions. While many environmentalists feel, that such a ban should remain in place, to ensure that the various natural resources are not destroyed. (Broder 2010) the overall effects of open drilling (they claim) can be seen in Valdez Alaska, where the industry resisted for years using double hull tankers because it would cost too much. However, once a tragedy occurred they began implementing such policies. This, the environmentalist say, is why there should be a restriction on the where oil companies are allowed to drill. (Exxon Valdez Facts 1999) What this shows, is the constant tug of war that is taking place on the issue. Where, it is important to ensure adequate supplies of oil and natural gas. Yet, engaging in an irresponsible manor (such as what occurred in Valdez, Alaska) can not be tolerated. This is the challenge that policy makers struggle with, as they want to maintain a balanced approach when it comes to energy strategy.

The Present Energy Policy / Strategy

The policy of the past (deniability) is slowly evolving, where the major oil companies are starting to embrace the fact that they play a role in global warming. Part of the reason, that is helping to push them in this direction, is the stricter environmental regulations that are taking place around the world (such as the Kyoto Protocol). Then, when you combine this with increased amounts of activism from environmental groups and improvements in technology, means that many incidents that are occurring are broadcast around the world within minutes. This has added to the overall amounts of information that has been collected from these different groups. Where, it can be used as evidence to show that the industry is responsible for what is occurring. A good example of this can be seen with various environmental groups accumulating evidence which can be used to eventually sue the major oil companies for damages that they caused because of global warming. (Fanola, 2005 p 112) This is significant because it underscore how the approach of denying, what is occurring and encouraging increased amounts of drilling are only contributing to the problem. As these various groups are able to collect evidence to show, how the industry is colluding to prevent significant changes from occurring. Over the course of time, the increased amounts of pressure have begun to highlight to many executive the overall futility of engaging in the practices of the past.

A New Approach

Contrary to what many people think, developing new forms of energy that can be used to help reduce dependence on fossil fuels is: time consuming, expensive and requires utilizing all of the different resources. This is because the overall energy structure is dependent upon fossil fuels for all of the different energy needs. In order to make the alternative forms more viable there needs to be a constant focus on developing a wide variety of technology. The problem begins with the fact that no one single energy solution can completely replace oil. A good example of this can be seen with the electric car. Back in 1911 it was widely thought that the electric car would revolutionize the automobile industry. With the New York Times saying, "The electric car has long been recognized as the ideal because it is cleaner, quieter and much more economical than its gasoline-fueled cousins." However, the problems that existed with this technology still exists, mainly it is not as reliable and can not… READ MORE

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