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Can't have it both ways, or can we?

Doug Grandt
Forum Posts: 26
Member Since:
March 27, 2014

I see statements and debates here and there on facebook (my social media of
choice given the options available) around conflicting outcomes of the "revenue-
neutrality" and "price signal" features or intentions of the Energy Innovation and
Carbon Dividend Act.
It seems that a lack of explanation might be responsible for our members
conjuring their own interpretations, some of which defy logic and misrepresent our
intentions.
As I understand it, this is the fundamental premise of the bill:
1. Fee at production site, refinery or port of entry is passed on to consumers
2. Wholesale and retail prices for all fuels and goods & services increase
3. Consumers choose whether to pay more for carbon-intense products 
4. 100% of fee revenues are returned per capita to compensate households
Yet, some of our members have stated publicly that they want to make it so
expensive for oil companies to make a profit they will go out of business.
This contradicts the "price signal" premise that oil producing and refining
companies pass the fee on to the consumers of gasoline, diesel, propane, fuel
oil, kerosene and other liquid combustibles, as well as natural gas, whether
individuals or businesses.
A fee passed-on will not increase expenses or bankrupt oil companies.
One way to bankrupt an oil company would be to disallow passing it on.
Consider our favorite oil company ExxonMobil who produces and refines right at 5
million barrels of petroleum per day. That is equivalent to about 2.5 million tons of

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CO2 per day, which is about a 900 million tons per year. At $15/tCO2, that is
about $14 billion per year in carbon fees. Since ExxonMobil's recent (2017) profits
were $19bn, that leaves little for paying dividends to investors, pay-down of it's
$42bn debt (ignoring its capital investment in exploration, development and
expansion of processing infrastructure, which must be curtailed), fund its
estimated $175bn − $250bn "final expenses" to clean up after itself, and $288bn
(current share value) to buy-back 4.2bn outstanding shares.
Two years of carbon fees would bankrupt the company should it not be allowed to
pass the fees on to consumers. Even a partial pass through would be its demise
after just a few years. A $10/tCO2 annual increase would increase annual
expenses $9bn pre-tax.
If we want ExxonMobil and their ilk to participate in a "just transition" they must
decommission, dismantle and detox all their toxic assets, pay their debts and not
crash the pension funds, the stock markets and the economy. By not allowing
them to pass the carbon fee on to consumers, we would make it impossible for oil
companies to clean up their messes, leaving no alternative for them but to go
bankrupt and leave us to pay the clean up expenses.
Leaving oil companies to their own devices in a laissez-faire economy is not in the
Public or National Interest. We must demand they create an endgame plan to
wind down steadily and as quickly as possible, paying for their own 'final
expenses' using diminishing yearly revenues without any expansion investments
and without bonuses or stock options to Officers.
Our intention of putting a price on petroleum that passes through to the consumer
is to send the signal to consumers and to the industry that petroleum's days are
numbered, thus incentivizing innovation and replacement carbon-free energy
technologies, and THAT will reduce demand thereby reducing industry profits
while it retrenches in a responsible, predictable and managed fashion. We must
control and enforce a responsible endgame.
Declining operations, no bankruptcies, final expenses paid—good to the last drop.
We want petroleum production and refining (as well as gas production operations)
to wind down, but not haphazardly—rather, on our terms in the Public and
National Interest.

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