The crusade against fossil fuels – crude oil, natural gas and coal – has engulfed the political arena for several decades, but the fight has expanded recently into the legal system.
Liberals on the left have tried to tax and regulate fossil fuels dating back to the 1970s when President Jimmy Carter signed the Crude Oil Windfall Profits Tax, which was later repealed when oil prices dropped from $30 per barrel to $10 and projected tax revenues failed to materialize. President Bill Clinton pushed, but failed to pass, a tax on fossil fuels, called the Btu Tax which is short for British Thermal Units, a measurement of energy. President Obama went another route with his cap-and-trade legislation, but it failed, too.
The efforts of governments to punish producers of fossil fuels seem to be endless. Currently, various groups push for a new carbon tax with the stated goals of increasing the cost of fossil fuels (making exotic energy, such as wind and solar, more competitive), reducing fossil fuel consumption, and further limiting greenhouse gas emissions. Of course, the adoption of a carbon tax would have a negative impact on crude oil and natural gas production, resulting in a reduction in supply. When supply declines prices would rise to consumers resulting in a negative impact on the economy.
Ironically, it is the states that rely heavily on outside sources for energy that are attempting to use the legal system to limit future production. New York has led the effort. Its attorney general has alleged in a climate-related lawsuit against ExxonMobil that it did not properly evaluate the punitive value of climate regulations on the financial performance of the company. The case began in October and involved alleged securities fraud. New York is seeking funds to pay for future damages caused by weather believed to have been enhanced by climate change. The trial concluded last week with ExxonMobil’s attorney stating in his closing argument: “This case is almost a joke, but it’s a cruel joke, your honor.”
In another case, an appeals court was asked by the City of New York to reinstate a lawsuit it brought against five major oil companies. A federal judge in Manhattan ruled in July 2018 against the city stating that the federal Clean Air Act exclusively sets controls regarding carbon dioxide emissions, which prevents claims based on state laws. The city seeks reimbursement for costs tied to climate change. New York alleged the companies contributed to the emission of greenhouse gases, which constitute a “public nuisance.”
Other states and cities have filed lawsuits against major oil companies using the climate-change rationale.
Attempts by governments to punish producers of fossil fuels will continue, and, if successful, will change the standard of living of Americans from coast-to-coast.
Alex Mills is the former President of the Texas Alliance of Energy Producers