Exxon released its report on how climate change will affect its business on Monday, March 31, 2014. You can read it here. I found it to be brutally honest. Since we are talking about one of the largest companies in the world, the bottom line is what it is all about and the bottom line of this report is that climate change will not affect its business much. This is something I have been saying for a long time. Very simply, a higher standard of living depends on energy and Exxon is in the business of providing energy.
There are those people that want to talk about going to an agrarian society where things are much simpler and energy consumption is much lower. That sounds fine, unless you live in a third-world country and you would like to move up from a life of poverty to something more comfortable. That will require energy to accomplish, and lots of it.
To put it in perspective, the U.S. has a population of about 300 million people. The world population is about 7 billion. That means there are 23 people living outside of the U.S. for every person in it. China alone has about 7 times has many people as we do. China and India together have one-half of the world’s people, about ten times as many people as in the U.S. How badly do these people want to improve their standard of living? Do an Internet search for images of ‘China, air pollution’ and see what you get. It is so bad in China that they even sell bottled air for people to breath. You might ask, ‘Why in the world would someone put up with that?’ and the answer is very simple – jobs.
China is a stunning example of what people will do for employment. They will live in an environment that will kill them and their families tomorrow in exchange for a higher standard of living today. In case you were wondering, it will only get worse. China and India have plans to open a new coal-fired power plant every week for the next 35 years.
So, are Exxon’s assets at risk?
Not a chance.