Breakingviews - Big oil lawsuits are riskier than quitting tobacco - Reuters

Big oil lawsuits are riskier than quitting tobacco | Reuters

Big oil lawsuits are riskier than quitting tobacco

Active pumpjacks from oil wells are pictured at the Inglewood Oil Field, the largest urban oil field in the United States, from the Baldwin Hills Scenic Overlook in Culver City, California, U.S., March 10, 2022. Picture taken March 10, 2022. REUTERS/Bing Guan Acquire Licensing Rights

NEW YORK, Sept 18 (Reuters Breakingviews) - California has been a guidepost to America’s future, and the United States is litigious. So it’s ominous for oil firms that the state has joined others in suing fossil-fuel companies for misleading the public about the dangers of global warming, seeking redress for climate-related disasters. Exxon Mobil (XOM.N), Chevron (CVX.N) and others look like they are following the road tobacco firms were on before they came to a giant settlement. The problem is, oil is an even harder habit to drop than cigarettes.

Oil companies have thus far stalled litigation by seeking to move cases to federal courts, where national regulations on emissions provide some cover. In April, however, the Supreme Court turned down five appeals by oil companies and others to move cases out of the states.

When it comes to local lawsuits over products that pose hazards to the public, the case of the tobacco industry is illustrative. It took four decades of increasing litigation until big companies were forced to settle with attorneys general in 52 states and territories in 1998. Similarly accused of misleading the public conversation over cigarettes’ risks, they agreed to cease marketing and pay over $200 billion to help with health-related costs and fund an anti-smoking campaign.

Climate-related damages will be higher. Drought and flooding, aggravated by global warming, cause giant losses. California says it has spent tens of billions of dollars addressing climate change, and will have to spend multiples of this in years to come. Assume it ultimately seeks $100 billion. The Golden State represents about 12% of the U.S. population. Scaled up to the whole country, that would mean roughly an $800 billion settlement. That’s too simple given climate’s differing hit to regions, but it indicates the magnitude of the potential problem in the United States alone.

While quitting smoking is hard, at least it’s straightforwardly beneficial. Kicking fossil fuels quickly may be harder. The price of crude is closing in on $100 a barrel and high oil prices slow economic growth. Litigation uncertainty will raise costs and could inhibit companies from drilling. U.S. crude production has risen to nearly 13 million barrels per day, offering a valuable counterweight to nations like Saudi Arabia which seek higher prices. Chevron charges that local courts have no role in crafting global energy policy. The temptation for lawmakers will be to agree, stepping in to help kick the can just a bit further.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

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CONTEXT NEWS

The state of California has sued Exxon Mobil, Chevron, Shell, BP and ConocoPhillips, accusing those groups of having misled the public about the dangers of fossil fuels and climate change for decades. The suit, filed on Sept. 15 in a San Francisco court, accuses the firms of creating a public nuisance, misleading advertising and unlawful business practices. It alleges the energy firms’ actions, and that of lobby group American Petroleum Institute, have caused damages as a result.

California is seeking to create an abatement fund to pay for future damages caused by climate-related disasters. In the filing, it says the state has spent tens of billions to adapt to and address climate change so far and the state will need to spend multiples of that figure in years to come.

Editing by Jonathan Guilford and Sharon Lam

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