Phaseout Profit Theory

I have been writing quite a lot of posts about energy on this blog since the Fukushima accident. Many of those were just reacting to things other people said. Many others were just reporting on statistics. But some of them were introducing some own ideas.

The most important of those ideas did not have a name until this post. I am calling it “Phaseout Profit Theory” as of now.

For example, I have described it in this post titled “The simple solution for global warming” from last July, and in many others.

The basic argument is this:

If regulation forces fossil fuel producers to reduce the supply of their product, that will, all things equal, increase the price of oil, coal, and natural gas.

Increasing the price will lead to higher profits for them.

It will also lead to much higher valuations for the oil fields and other fossil fuel reserves they own. That alone will send profits through the roof, even before they sell the first barrel of oil.

So why does everybody assume that fossil fuel interests should be opposed to regulation bringing their production down? They should join forces with 350.org and Joe Romm, and start fighting for the privilege of selling much less.

That, in a very short summary, is the basic idea. I happen to think it is correct, and it would completely change the political landscape, if true.

So, here is a short name for this. “Phaseout Profit Theory”. A Google search for that returns nothing right now, which is good, since it means that there will be no confusion with something completely different this term has been already used for.

And, in one short sentence, it would be: Fossil fuel companies should fight for the privilege of selling much less, since that would increase their profits.

 

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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