The huge hidden costs of our fossil-fueled economy

The huge hidden costs of our fossil-fueled economy

Oil companies may be the most profitable companies on the planet. But that’s only because we let them destroy the planet for free.

Extracting fossil fuels is a lucrative business. Last year, ExxonMobil made $32.5 billion in profits. But, arguably, it’s a business built on shaky foundations. If we were to account for the full cost of fossil fuels to the environment, it might completely wipe out the industry’s profitability.

That’s the conclusion of a new analysis from the University of Cambridge that tallies up the social cost of producing oil, gas and coal products. Across 20 leading companies, it finds “hidden economic costs”—that is, costs that aren’t currently paid—of $755 billion in 2008, and $883 billion in 2012. Which is several times what the companies reported in earned income in those years.

 

Hidden economic cost versus after‐tax profit, by company, 2008 to 2012.UniversityOfCambridge_figure1Source: University of Cambridge Judge Business School.

 

“The 20 companies as a group are highly profitable, with after‐tax profits of about 8.2 % of revenues in 2008 and 8.6 % in 2012. However this does not take account of the hidden economic cost to society that is caused when their products are burned and CO2 is emitted to the atmosphere,” says the paper by Chris Hope, Paul Gilding, and Jimena Alvarez.

 

Source: Fast Company

Date: August 2015

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