#exxonlied

rightsaidfred Pah, another el-cheapo clickbait post, spawned by Twitter. The conversation went something like this:

mt: Exxon knew, of course. Every decent geophysicist has known about climate problem for decades. How could they not know? All oil majors know.
me: Errm, this is what I’ve been saying for some time. I didn’t get traction, though. All govts knew, too, of course.
Gavin: I am too sexy for this conversation The issue is not that #ExxonKnew, but that #Exxonknewthenliedaboutit (possibly in contravention of securities law). At some point, Exxon went from standard industry bias to funding & putting out denialism that their folk knew was BS.
me: Yes, #Exxonlied is the correct tag. But I can’t get excited by securities law.
Eli: Not planning to retire, are you?
me: Yes but hope my pensions aren’t dumb enough to rely on company disclosures & instead do their jobs.

Before Exxon sue me to death, I should point out that I doubt that they actually lied about anything very much, and possibly nothing at all, directly. See What I said about Exxon sample 1 for how that kind of stuff pans out, though. But deliberately misleading people, and spreading FUD, and indirectly paying other people to lie for you isn’t morally distinguishable.

However, the #Exxonknew stuff is still bullshit. Just like that twat Boris it is popular bullshit, but that’s no reason I should like it, and no reason you should either.

The legalese argument – “oh dear, SC rules say that maybe Exxon should have said more in their annual filings” – is in my opinion only an argument you’d use if you’ve lost every other way. In practical, real-world terms, it is stupid. For two obvious reasons. Firstly, because no-one with any degree of sanity – certainly nothing as large as a pension fund – should have been relying on any company for full disclosure in their annual filings. That’s what these people have analysts for. If your pension fund is too rubbish to do due diligence, fire them and get another one. Secondly, because (as we all know) #Exxonknew is bullshit: because #Everyoneknew. It was full public knowledge, everything that Exxon knew, none of it was secret.

There, I feel better now. Rip me to shreds.

Gavin’s At some point, Exxon went from standard industry bias to funding & putting out denialism that their folk knew was BS is essentially correct, but I don’t think there’s any great mystery: the answer is Lee Raymond. No?s

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24 thoughts on “#exxonlied”

  1. Yes but hope my pensions aren’t dumb enough to rely on company disclosures & instead do their jobs.

    Maybe fiduciary regulations are stricter in the UK than the US. But I have seen no evidence that the guys on Wall Street are that smart, or that the City boys are any smarter than the Wall Streeters. Alternatively, they did own XOM at some point but were either smart or (more likely) lucky enough to sell it before the feces intersected the rotating blade. (FD: I am in the latter group, having disposed of inherited XOM stock several years ago.)

    In any case, if your pension plan includes a US stock index portfolio, it’s very likely that you own XOM via that portfolio. Most US pension schemes include such a portfolio; I don’t know about the UK.

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  2. I’ve been trying to put my finger on how the Exxon/climate issue (where I don’t think suing Exxon is appropriate) is different from the Tobacco industry/smoking issue (where I think that, if anything, the tobacco industry wasn’t punished enough for decades of cover-up)…

    I think it is partially that the tobacco industry had access to research that others did not (whereas the best climate science is in academia and governments), partly that climate change is a fuzzier issue than the smoking-cancer link, and partly I’m not sure what. Thoughts?

    [I don’t understand your “cover-up”. What did Exxon cover-up? -W]

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  3. WC writes:”Firstly, because no-one with any degree of sanity – certainly nothing as large as a pension fund – should have been relying on any company for full disclosure in their annual filings. That’s what these people have analysts for. If your pension fund is too rubbish to do due diligence, fire them and get another one. “

    You’ve apparently already forgotten “Top hedge fund manager: Global warming isn’t a danger

    This is not the first time Asness has waded into the global warming debate. Last year, he was criticized for an offhand remark he made about climate change in an article directed at economist Paul Krugman on the Fed and inflation. (A little more than four years ago, Asness and others predicted the Fed’s monetary stimulus would lead to inflation. It hasn’t.) In the piece, Asness wrote, “I’m amazed that a Paul Krugman can look at 15+ years of the earth not warming and feel his beliefs need no modification or explanation, but 4 years of the CPI not inflating is reason not simply to declare victory, but to decry those who disagree with him as ‘Knaves and Fools.’”

    Still waiting on that inflation. And the pause? How’d that work out for you, Cliff? Masters of the Universe indeed. With more due diligence like that we’ll all be paupers.

    [I don’t understand your point -W]

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  4. I understand his point perfectly. Hedge funds are in the same size range as pension funds.

    On the main issue, Exxon’s biggest problem may be civil damages suits, both by private parties and state/local governments, although I think WMC is incorrect to minimize the gravity relative to securities laws of saying one thing to your shareholders while having evidence that something else is actually true.

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  5. MMM, here is a summary of the RICO case against Philip Morris and other tobacco companies:

    “In 1999, the United States Department of Justice (DOJ) sued several major tobacco companies for fraudulent and unlawful conduct and reimbursement of tobacco-related medical expenses. The circuit court judge dismissed the DOJ’s claim for reimbursement, but allowed the DOJ to bring its claim under the Racketeer Influenced and Corrupt Organizations Act (RICO). The DOJ then sued on the ground that the tobacco companies had engaged in a decades-long conspiracy to (1) mislead the public about the risks of smoking, (2) mislead the public about the danger of secondhand smoke; (3) misrepresent the addictiveness of nicotine, (4) manipulate the nicotine delivery of cigarettes, (5) deceptively market cigarettes characterized as “light” or “low tar,” while knowing that those cigarettes were at least as hazardous as full flavored cigarettes, (6) target the youth market; and (7) not produce safer cigarettes.

    On August 17, 2006 Judge Kessler issued a 1,683 page opinion holding the tobacco companies liable for violating RICO by fraudulently covering up the health risks associated with smoking and for marketing their products to children. ‘As set forth in these Final Proposed Findings of Fact, substantial evidence establishes that Defendants have engaged in and executed – and continue to engage in and execute – a massive 50-year scheme to defraud the public, including consumers of cigarettes, in violation of RICO.’ “

    I don’t think that the fossil fuel industry have gone to these lengths to deceive, and I don’t think that the damages are as easily identified.

    [The damages point is interesting. Cigarettes are objectively simply damaging: they harm people and offer no benefit, other than the pleasure of smoking (errm, like whiskey and so on). So manipulating people into increasing their belief in the pleasure is significant. Fossil fuels do damage, but they have objective benefits; indeed, all cost-benefit analyses show their net benefits to be positive. The “discourse” around #exxonknew rather tends to neglect this point, and to treat fossil fuels as pure cost with no benefit -W]

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  6. “Fossil fuels do damage, but they have objective benefits; indeed, all cost-benefit analyses show their net benefits to be positive.”

    An amazing claim in economics. Wow!

    Are you sure?

    [Yes -W]

    No doubt that burning some of the fossil fuels has a net benefit. The climate impact is small, and to date might even be a net gain by avoiding future cooling. Cheap energy makes lots of other problems easy. If that “net benefit to 2016” or some year in the past or near future is what you mean, I’ll agree.

    On the other hand, burning all of the fossil fuels will leave a world 10C or more warmer. This will lead to large areas in the tropics being too warm for humans to live without mechanical cooling, to the collapse of most ice sheets, and perhaps more. The cost of the energy, both direct and indirect, rises as the fraction of fossil fuels extracted rises. Technology makes the value of the fossil energy produced less, by providing alternative sources with lower indirect costs, such as solar, wind, fission and fusion. Indirect costs includes both climate change, land degradation and toxic byproducts. At some point, doesn’t the total cost of fossil fuels exceeds the total benefit? The indirect costs make this a “Commons” problem, which of course makes it much harder.

    [I’m thinking of to-2100; not of burning all the coal. I don’t think anyone’s analysis covers that, because its not sensible to -W]

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  7. So business as usual til 2100, and counting all of the benefits before 2100 and none of the indirect costs after 2100? That is sensible? Amusing. Business as usual is more about minimization of direct costs, and human perceptions rather than reality, and is not about economically ideal paths.

    Note again the wild claim that “ALL” cost-benefit analyses show…

    [Feel free to show one that disagrees -W]

    I’m fairly sure I can find a pile of studies showing that nuclear fission is cheaper than coal when counting all costs direct and indirect.

    [Non-sequitur. I didn’t say that fossil was *cheapest* or had the most-positive-net-benefit of all pathways; I said that it had net benefits, which is an entirely different matter -W]

    Ditto for a fraction of electric power from solar, and in many places thermal solar for water heaters for domestic use. Ditto for a fraction of electric power from wind. Ditto for replacing most fossil fuel powered cars and light truck with battery electric powered. Or for that matter, many cars with bicycles. And so on…

    And of course, I only need to find one such study. Are you really sure about ALL?

    This is a “Commons” problem, and indirect and delayed costs are not perceived accurately by the mass of humans in a rational fashion. Nuclear, for example. Nuclear can be and is much safer, but that doesn’t matter because it is scary. Unless you are willing to trust experts, or are willing to wade through a lot of reading and do a lot of thinking, scary is what matters.

    I mostly trust your statements on sea ice. Economics….Well, a carbon tax isn’t a bad idea. It is not as good as you seem to think, but is better than doing nothing.

    No comment on rowing. 🙂

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  8. I’m reminded of something I read long years ago, probably at RC — that at the time, the main employment path for climate modelers as well as paleogeologists was the petroleum industry — that they were modeling the climate of the past to figure out where the continents were at the time the then climate was favorable so large basins full of organic material formed, and then how they were buried and where they’d moved to by now when they were full of oil and gas.

    Proprietary unpublished work, these stories leak out as gossip in the hallways at science meetings with people you remember as plenty smart from grad school who disappeared into the corporate jobs and never published

    [I’m doubtful that there was lots of fossil-employed climate modellers; I think I’d have meet some. They had lots of computing kit for the reservoir sims, though -W]

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  9. > Nuclear can be and is much safer, but … it is scary.

    Ya know, I’ve never seen a tradeoff between the amount of radioactive material the oil and gas and coal industries put into the environment (quite a bit) versus the amount expected from the average-every-thirty-years meltdown that’s probably the worst case for fission plants.

    I guess a lot of the problem is that the radioactives in coal are pretty diffuse throughout (although I do recall that part of the political fear of reprocessing is that developing reprocessing techniques would also allow mining coal ash piles for fissionables, and lots of third world countries would do that because they can’t buy ore to refine).

    And while the radon that comes up with gas and oil is also pretty diffuse once they let it loose, the other radioactive material hangs around and does get concentrated.

    “… the extraction process concentrates the naturally occurring radionuclides and exposes them to the surface environment and human contact, these wastes are classified as Technologically Enhanced Naturally Occurring Radioactive Material (TENORM).”

    https://www.epa.gov/radiation/tenorm-oil-and-gas-production-wastes

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  10. While potential criminal prosecutions as currently being considered by state AGs may be a bit of a stretch, Exxon and competitors who acted in a similar manner have had too long and easy a ride where funding denier groups from corporate petty cash was almost entirely free of consequences.

    Raising the pressure on them it may act as a deterrent to future misbehavior as well as possibly bringing to light (additional) documented proof of what many have long suspected or alleged regarding fossil fuel companies’ funding of such groups.

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  11. “I didn’t say that fossil was *cheapest* or had the most-positive-net-benefit of all pathways; I said that it had net benefits, which is an entirely different matter -W”

    Oh. Kinda like saying wallpaper paste is tasty and nutritious food when compared with starving to death. You are “correct”, if that is what you mean. Maybe even to the point of burning all the fossil fuel, even the really really expensive to extract ones, just before we switch to something better.

    @HR, everyday, widely dispersed risks (chemical as well as radioactive) and future climate change risks from fossil carbon don’t look as scary as the risk from the average-every-thirty-years meltdown that’s probably the worst case for fission plants. When the risk or reward is uncertain, humans tend to not perceive it the same as a constant risk or reward. Among other things, this is why people buy lottery tickets, even though it is a proven beyond a shadow of a doubt expected net loss.

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  12. Thanks for the RICO summary. That definitely helps provide some focus for thinking about the differences. But also the parallels. I’ll try to expand on my thinking a bit more when I have time…

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  13. Lee Raymond: $144,573 a Day

    Nice song

    Brexit fits right in with floods in London, derechos and tornadoes, lightning, mudslides, heat domes and wildfires. What’s the use. I don’t like despair, but this is a mess. Your Cameron doesn’t appear to have much of a brain. But we have Trump and the Freedom Caucus. I’ll shut up.

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  14. I think Boris is the best thing to come along since David Cameron .
    If only he could persuade Trump to stay and run for Permanent representative of the Church of Scotland in Brussels

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  15. To be honest, the whole thing about Exxon lying is that it’s been pretty obvious for years. It’s just about the fine line between ‘Corporate Propaganda’ and ‘Outright lying’. Not on the same scale or degree as tobacco, where they clearly sat on evidence for illness and addictiveness for years.

    And it’s not as if we can suddenly close Exxon down for it. The best result would be a cleanup of the rules for political donations including front groups, with full transparency, that would have made all this obvious to start with.

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  16. WC writes:”[I don’t understand your point -W]

    After writing: “That’s what these people have analysts for. If your pension fund is too rubbish to do due diligence, fire them and get another one.“

    First,the obvious: individuals have little capacity to gauge whether their pension plan’s investments, or their 401k’s, or their own personal stock portfolio is wisely invested. If they have that capacity then they should be working as an investment advisor.

    Due diligence does not mean what you think it means. Have you forgotten 2007-8 already? Who did their due diligence? Markets failed. How many investors and/or economists saw it coming? Very, very few. All the others must have failed in their due diligence.

    Pension plans are increasingly invested in hedge funds. Some are allocating 50% of their money in hedge funds.

    [{{cn}}. That doesn’t seem very believable to me. For example, http://www.ft.com/cms/s/0/b7ce3f4a-f685-11e5-803c-d27c7117d132.html#axzz4CbYjLY9a says “Europe’s second-largest public pension fund, PFZW, cut its entire €4.2bn hedge fund allocation last year. VER, Finland’s state pension fund, intends to increase its allocations to hedge funds and other complex strategies to 6 per cent of its total $20bn portfolio”. And so on.

    http://www.barclayhedge.com/research/money_under_management.html tells me “As of 1st Quarter 2016, total assets under management for the hedge fund industry was $2736.6 billion”. Whereas http://www.oecd.org/finance/private-pensions/globalpensionstatistics.htm says “Pension funds experienced strong performance during 2014, with total assets under management in the OECD topping USD 25 trillion”. So total hedge fund assets are about 10% of pension assets; and they’re not all owned by pensions.

    http://www.ft.com/cms/s/0/a24538fa-1c31-11e6-b286-cddde55ca122.html#axzz4CbYjLY9a says “A typical workplace defined benefit (DB) pension fund is now investing about 6 per cent of its assets in hedge funds, up from 1.5 per cent in 2009, according to official figures.”

    I think you’re somewhat careless with your “facts” -W]

    Cliff Asness. One of the Masters of the Universe. Hedge fund guy. University of Chicago educated economist. He did his ‘due diligence’ on global warming and couldn’t find it. He’s been predicting rising inflation for years. His fund lost nearly 50% of their portfolio due to the 2007-8 financial collapse. Note: the whole idea of a hedge fund is to make money even when markets are falling.

    As I said, I don’t think ‘due diligence’ means what you think it means.

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  17. I think this whole exxonlied thing is more about scoring political points then doing anything legally useful.

    That being said Exxon is, as the lawyers say, a bad actor.

    I knew a lawyer who use to work for Exxon. During her employment there, one of Exxon’s underground pipeline ruptured under a residential neighborhood. Under U.S. law, Exxon had a duty to notify regulators. Not doing so is a criminal act. Exxon wanted this lawyer to participate in a criminal cover-up.

    Exxon order her to participate in this illegal activity. Rather than face disbarment or jail time, she quit.

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  18. WC – I said that some pension plans have 50% of their allocations in hedge funds. Not one of your sources speaks to that. Jesus. What’s so difficult with this?

    [You offered a bald assertion with no evidence at all to support. I offered evidence that your assertion couldn’t be general, and seemed unlikely. Naturally, it is possible that there are some pensions that do what you say, but I notice that you still haven’t provided any evidence -W]

    As for the overall allocation:

    Here’s one from 2014: “Of the $3 trillion in public assets currently in pension funds throughout the country, almost a quarter of that has already found its way into so-called “alternative investments” like hedge funds, private equity and real estate. That translates to roughly $660 billion of public money now under private management, invested in assets that are often arcane and opaque but that offer high management and placement fees to Wall Street financiers.”

    [This, too, is not evidence of your assertion. And notice that “almost a quarter” applies to “like hedge funds, private equity and real estate” – from your source, the distribution can’t be told -W]

    The OECD’s large pension fund survey has the allocation to hedge funds at 15% in 2011, 20% in 2012, 16% in 2013 and 15% in 2014. Annual Survey of Large Pension Funds and Public Pension Reserve Funds, page 28.

    [I think you intended to link to something, but I don’t know what. Possibly http://www.oecd.org/daf/fin/private-pensions/2015-Large-Pension-Funds-Survey.pdf? However, that doesn’t have those numbers on p28 -W]

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  19. A usually unreliable source-

    http://m.washingtontimes.com/news/2016/jun/29/climate-change-prosecutors-suffer-defeat-as-attorn/

    The Washington Times ( S. Fred Singer’s editorial home) reports U.S Virgin Islands Attorney General Claude Walker has withdrawn his March 15 subpoena of ExxonMobil:

    “In the Joint Stipulation of Dismissal, Mr. Walker said he would pull his March 15 subpoena of the world’s largest energy company, which had challenged the subpoena as unconstitutional.

    After conferring on this matter, the parties mutually agreed that Attorney General Walker will withdraw the subpoena and ExxonMobil will stipulate to the dismissal without prejudice of this action,”

    [Ah, its becoming more mainstream. I’d found http://dailycallernewsfoundation.org/2016/06/29/liberal-ag-global-warming-investigations-into-exxon-are-falling-apart/ but that looks a bit fringe -W]

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