We are examining policies and initiatives that collectively could build a transition to a “new, better normal.” Nationalizing the fossil fuel industry is a bold initiative that could make a just transition possible. So today we examine a new report from The Next System Project, “The Case for Nationalizing the Fossil Fuel Industry.”
Nationalize the Fossil Fuel Industry
For five decades the oil industry has understood that gas and oil extraction is killing the planet, but rather than being candid about this and shifting their business model to sustainable forms of energy, they lied and dissembled. And here we are, with very little time to make an abrupt and just transition. The industry has had abundant time to do the right thing and has failed. And from all reports, they have no intention of suddenly seeing the light.
“Fossil fuel executives have known about global warming and the role their firms play in the impending catastrophe for close to half a century. Rather than diversifying their businesses and investing in the green energy of the future, they have decided to double down, extract more, and intentionally lie to the public in order to sow seeds of doubt in what they themselves knew, and continue to know, to be the truth; all with the end goal of maximizing power and short-term profits through a continued harmful business as usual model.”The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”
Shell’s chief economist summarizes their current thinking as follows: “we’re going to get as much out of [oil and gas] for as long as we can.” With wells being abandoned and left for states to clean up and with oil prices wavering between $35-$40/barrel, continued extraction is a losing operation. In this economic context, it might seem ludicrous that the industry isn’t looking for another business model. But for a decade, the industry has been playing a Ponzi scheme, and they are now heavily in debt underwriting the expensive infrastructure required to extract, process, and transport fossil fuels, as explained by The Next System Project:
“They [oil & gas industry] are constrained by their own carbon lock-in: even if fossil fuel companies wanted to pivot their operations, their heavy investments in fossil fuel reserves, extraction, and transport means that they need to keep extracting and selling to the market for decades to come to recoup the costs of the capital-intensive infrastructure.”The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”
We don’t have decades and it is abundantly clear that the industry has no intention of doing what is needed at this time. What’s more, as The Next System Project points out, it just may be that industries like this have such a singular purpose that to deviate from that purpose may not be realistic. And certainly to achieve a swift transition requires a coordinated national strategy, something that the gas and oil industry would only undermine, not support.
“Markets, for their part, are incapable of managing such a sizable transition, particularly since they’ve been manipulated in the industry’s favor through things like subsidies and bailouts. A transition will be fought tooth and nail by existing fossil capital. And importantly, phasing out fossil fuels requires a plan, which the country sorely lacks at this time.”The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”
But what is involved in “nationalizing” the industry? How can this be accomplished realistically. I think one thing that we have all learned in the past three months is that our nation is able to invest trillions to rescue our economy. We now must try to rescue our planet. And, as reported by The Next System, due to the plunge in oil prices, the cost for nationalizing the industry has been reduced significantly.
“While a few years ago taking over just the top 25 oil, gas, and coal companies would have required over $1.15 trillion, today a takeover could cost just $550–$700 billion (or half of that if the Fed were to acquire only majority control—51 percent—of companies). That’s a small price to pay to neutralize fossil fuel industry power once and for all.”The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”
Laying out the various mechanisms of how nationalization of an industry can be achieved is beyond the scope of this post, but The Next System Project has developed a detailed report and will be the first source we examine in trying to describe how this is possible. Click here to read the full report.
If this kind of work interests you, Retake has formed a Transformation Study Group to examine a range of potential initiatives and policies that could contribute to creating a just transition to a sustainable, sane future in New Mexico. We have held one Zoom meeting and have another coming soon. If you’d like to join the group, write to RetakeResponse@gmail.com and tell us a bit about why you’re interested.
In solidarity and hope,
Paul & Roxanne