California has joined other states in suing Exxon Mobil, Chevron, Shell, BP, and ConocoPhillips for misleading the public about the dangers of fossil fuels and climate change. The lawsuit, filed in a San Francisco court, accuses the oil companies of creating a public nuisance, engaging in misleading advertising, and engaging in unlawful business practices. The state alleges that the actions of these companies, along with lobby group American Petroleum Institute, have caused significant damages.
The state of California seeks to establish an abatement fund to cover the costs of future damages caused by climate-related disasters. So far, the state has already spent tens of billions of dollars on addressing climate change, and this amount is expected to increase significantly in the coming years. If California ultimately seeks $100 billion in damages, scaled up to the entire country, the potential settlement could reach around $800 billion.
This lawsuit against oil companies follows a similar pattern of litigation seen with the tobacco industry. It took decades of increasing litigation before major tobacco companies were forced to settle with attorneys general in 52 states and territories. They agreed to cease marketing and pay over $200 billion for health-related costs and anti-smoking campaigns.
The challenge with transitioning away from fossil fuels is that it is not as straightforward as quitting smoking. The price of crude oil is currently approaching $100 a barrel, and higher oil prices can slow economic growth. Litigation uncertainty may increase costs and hinder companies from drilling. However, the consequences of climate change, such as droughts and flooding, can lead to substantial losses.
It remains to be seen how these lawsuits will play out and what impact they will have on the oil industry. The outcome of the litigation could significantly affect the future of fossil fuel consumption and the transition to renewable energy sources.
Sources:
– Reuters Breakingviews
– California Lawsuit against Exxon Mobil, Chevron, Shell, BP, and ConocoPhillips