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How to Make the Oil Industry Go Bust

Author

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  • Fix, Blair

Abstract

Can the oil industry afford to clean up its mess? If by ‘mess’ we mean fossil-fuel-induced climate change, the answer is almost certainly ‘no’. But what if we look at a more limited cleanup scenario, restricted to the remediation of conventional oil and gas wells? Even then, it seems that the oil industry may already be bankrupt. As a case study, this paper estimates the solvency of the (conventional) oilpatch in the Canadian province of Alberta. By law, Albertan oil companies are required to pay for well remediation. To date, however, the oil industry has saved little for this expense. Instead, it has assumed that future oil production will pay for existing cleanup liabilities. But will it? Using cleanup estimates from the Alberta Liabilities Disclosure Project, I estimate the past, present and future solvency of the (conventional) Alberta oil industry. I find that at present, the oilpatch sits on the precipice of insolvency.

Suggested Citation

  • Fix, Blair, 2023. "How to Make the Oil Industry Go Bust," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 103, pages 2-25.
  • Handle: RePEc:zbw:espost:270856
    as

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    File URL: https://www.econstor.eu/bitstream/10419/270856/1/20230331_fix_how_to_make_the_oil_industry_go_bust.pdf
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    References listed on IDEAS

    as
    1. Fix, Blair, 2021. "The Ritual of Capitalization," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 97, pages 78-95.
    2. Fix, Blair, 2021. "The Ritual of Capitalization," SocArXiv cf5xv, Center for Open Science.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Alberta; cleanup; insolvency; oil; pollution;
    All these keywords.

    JEL classification:

    • P00 - Political Economy and Comparative Economic Systems - - General - - - General
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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