stowie
Active Member
An argument for a windfall tax not involving the obvious issues around energy poverty was given somewhere (I cannot remember where, but this is not my theory). It sort of went like this.
Although oil and gas is enormously important to the world economy today, the direction of travel is clear. Unless we decide to let climate change let rip and enjoy the ride, oil and gas won't dominate energy production in the same way in the future. Even now renewable cost can beat fossil fuel, it is the infrastructure that costs big (as did the oil and gas infrastructure before it).
In this climate - and bearing in mind the fossil industry took a big shock during COVID with negative futures etc. - it doesn't really make much sense for BP and Shell to be pouring vast amounts of investment money into oil and gas to see prices reduce in a diminishing long term market. In the past when demand could be assumed to be an ever upwards curve then investing heavily made sense. Not so much now. The supply side of the fossil fuel equation is pretty happy with things as they are. Rent extraction is the name of the game.
What about risking that BP and Shell investment in renewables? Well, GM and Ford didn't spearhead the seismic changes we are seeing in the car industry, that was - in large part - Tesla, a company that a decade ago was barely known. Incumbents rarely instigate revolutionary change. That profit might be better invested in companies and technologies not intimately tied to the status quo.
As I say, it wasn't an argument I thought up and it was far better presented with graphs of production trends and historic OPEC information but I think the above is an approximation of the gist.
