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Carbon, Carbon Dioxide, And Big Oil

Apr. 12, 2018 1:24 PM ETBP, COP, CVX, SHEL, XOM106 Comments
Tristan R. Brown profile picture
Tristan R. Brown


  • San Francisco's and Oakland's climate lawsuit against Big Oil took another step forward last week.
  • The Cities filed an amended complaint stating that, among other things, extractors of fossil carbon rather than emitters of carbon dioxide should pay for their climate change abatement programs.
  • Given that the amended claim is now made under federal common law, the implications of a successful lawsuit are vast and go beyond just Big Oil companies.
  • This article examines the Cities' arguments and considers some of their implications.

Last week saw an important development in San Francisco's and Oakland's ("the Cities") climate lawsuit against BP (BP), Chevron (CVX), ConocoPhillips (COP), Exxon Mobil (XOM), and Royal Dutch Shell (RDS.A)(RDS.B) when the Cities amended their complaint against the large integrated petroleum and natural gas producers. The Cities had originally sued the firms for "abatement" costs under California common law despite the national (and, indeed, international) aspects of global climate change. Federal district court judge William Alsup determined that the claims arose under federal common law, however, and the amended complaint reflects this decision.

What is interesting about the amended complaint (and notable for investors in the defendant firms) is why it claims that the companies should be held responsible for the Cities' climate change abatement costs. Specifically, it does not take issue with the fact that the companies produced greenhouse gas emissions, which they of course did in only limited quantities as extractors rather than combustors (defined here as those who cause the combustion) of fossil fuels. Rather, it faults the companies for extracting the fossil fuels that were ultimately combusted by other entities. In doing so, they claim, they "assisted in the creation of, contributed to, and/or maintained and continue to cause, create, assist in the creation of, contribute to and/or maintain global warming-induced sea level rise, a public nuisance [under federal common law] in Oakland."

In other words, by extracting petroleum and natural gas, the Cities believe that the Big Oil companies are responsible for the rising sea levels that are expected to inundate large amounts of land in the Bay area by 2100. There is just one problem: this contention ignores basic chemistry. Taken to its logical legal conclusion, every extractor (rather than burner) of fossil fuels is responsible for the Bay area's climate abatement costs regardless of whether or not this extraction actually contributed (or

This article was written by

Tristan R. Brown profile picture
My articles do not represent investment advice. Readers should perform their due diligence before investing in any security or fund that is mentioned by my articles.

Analyst’s Disclosure: I am/we are long XLE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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