I don’t know that any company would really be “hit hard” at all, depending on how a cap-and-trade system is ultimately implemented. Cap-and-trade is slang for an emissions trading scheme, where reductions in carbon emissions are assigned an economic value, and these economic units can then be traded on an exchange like stocks or commodities. Although we don’t have a cap-and-trade system yet that’s mandated on the US federal level, there is a voluntary system in effect–the Chicago Climate Exchange has been trading carbon credits for several years now. Most of the proposals in the US for instituting an emissions trading market involve voluntary reductions in carbon emissions. That is, a company that thinks it will make more money selling carbon credits on an exchange than it will cost to take the actions necessary to generate those credits by reducing their carbon footprint will be encouraged to take those actions and go to market with their credits, which they hope will be worth more than it cost them to reduce their CO2. This is a pretty good bargain because you can generate a carbon offset fairly cheaply: invest, for instance, in timberland, a natural carbon sink. Even if carbon offsets were mandated by law–an outcome I don’t see happening politically in the United States, at least not in any bill that’s likely to come out of Congress in 2010–an oil company could lessen the pain simply by buying up tons of carbon credits when they’re low and then selling them off when the price goes up, which is classic market speculation. So I don’t believe a cap-and-trade system will really pinch oil companies significantly at all. They may cry otherwise to the rooftops to avoid the promulgation of regulations that will affect them, but that’s politics.
In addition to the good thoughts in the other answer, a question is how would you determine and assign the emissions for oil? Emissions are generated during production, refining, and transportation of oil and oil products. Many US companies, such as Exxon, produce or buy much of the oil that they sell in the US from other countries. Do emissions related to that count? Refineries’ emissions might be fairly straightforward to calculate. But perhaps the greatest emissions related to oil come when the oil is burned in your car. Who gets dinged for that? If you bought Exxon gas, does Exxon pay? Who keeps track? In the final analysis, much of the carbon emission in the US due to burning oil is generated by 307,000,000 individuals whose driving (and other transportation activity) burns up 70% of the oil used in the US – 70% of 19,600,000 barrels every day.
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