Climate Progress: An insider's view of climate science, politics, and solutions

The rich do get richer — and at your expense. The energy giant has posted the largest quarterly profits of any U.S. company ever:

Profits at oil companies this quarter continued to reflect oil prices that almost doubled in the second quarter from the year earlier.

Exxon Mobil on Thursday reported that second-quarter profit rose 14 percent, to $11.68 billion, the highest-ever profit by an American company. Exxon broke its own record.…

Earlier in London, Royal Dutch Shell, Europe’s largest oil company, reported a 33 percent increase in second-quarter profit on Thursday, helped by a higher oil price even as production declined…. Shell’s profit rose to $11.56 billion from $8.67 billion in the period a year ago.

So, yes, you should’ve listened to your father’s friend when he said to you in college, “petrochemicals.”

Paul Krugman has a blog post about one of my favorite economists, Marty Weitzman. He has the central point right, which is that “on any sort of expected-welfare calculation, the small probability of catastrophe dominates the expected loss.”

But Krugman’s general lack of understanding of global warming — and his willingness to believe anything Bjørn Lomborg says — undermines his entire analysis:

Bjorn Lomborg … says that climate change will reduce world GDP by less than 0.5%, so it’s not worth spending a lot on mitigation.

Weitzman’s point is, first, that we don’t actually know that: a small loss may be the most likely outcome given what we know now, but there’s some chance that things will be much worse. (Marty surveys the existing climate models, and suggests that they give about a 1% probability to truly catastrophic change, say a 20-degree centigrade rise in average temperature.)

… Suppose that there’s a 99% chance that Lomborg is right, but a 1% chance that catastrophic climate change will reduce world GDP by 90%. You might be tempted to disregard that small chance — but if you’re even moderately risk averse (say, relative risk aversion of 2 — econowonks know what I mean), you quickly find that the expected loss of welfare isn’t 0.5% of GDP, it’s 10% or more of GDP.

Well, ‘yes’, on the final point, but ‘no’ on every other point.

Indeed, a 20°C rise in average global temperature — which translates to perhaps 50°F warming over much of the inland U.S. — is “James Lovelock” territory where “the Earth’s population will be culled from today’s 6.6 billion to as few as 500 million.” Catastrophic climate change is anything significantly over 3°C, which is not a 1% chance, but a near certainty if we don’t reverse greenhouse gas emissions sharply and soon (see “Is 450 ppm politically possible? Part 0: The alternative is humanity’s self-destruction“).

Lomborg, of course, does not have anywhere near a 99% chance of being right that “climate change will reduce world GDP by less than 0.5%.” Indeed, if we actually followed Lomborg’s do-nothing prescription, then he has precisely a zero chance of being right. He is a pure disinformer (see “Lomborg skewers the facts, again” and “Debunking Bjørn Lomborg — Part III, He’s a Real Nowhere Man“).

Weitzman’s analysis is, however, very important for traditionally economists — and everyone else — to understand, so let me reprint my September post, Harvard economist disses most climate cost-benefit analyses, below:

(more…)

May 2008 saw another sharp sharp drop in vehicle miles traveled (aka VMT) according to the Federal Highway Administration’s monthly report on “Traffic Volume Trends.” This follows a 4.5 billion mile drop in April and “the sharpest yearly drop for any month in FHWA history” in March (see here).

The moving 12-month trend-line is startling and suggests $4 a gallon is the first (but not the last) genuine tipping point for U.S. drivers:

(more…)