“Runaway growth in the emission of greenhouse gases is swamping all political efforts to deal with the problem, raising the risk of “severe, pervasive and irreversible impacts” over the coming decades, according to a draft of a major new United Nations report.
The Intergovernmental Panel on Climate Change, a body of scientists and other experts appointed by the United Nations that periodically reviews and summarizes climate research, found that companies and governments had identified reserves of these fuels at least four times larger than could safely be burned if global warming is to be kept to a tolerable level.
Put into terms that even capitalists can understand, the valuation of (fossil fuel) companies and petro nations are based largely on their perceived (reported) oil, gas and coal reserves. If 3/4’s of these reserves cannot be used. The valuation of these companies and nations is actually 1/4 of their claimed value.
For example, ExxonMobil’s oil reserves are reported to be 72 billion BOE (barrels of oil equivalent), but it has only 18 billion usable barrels. Its’ market capitalization of $432 billion should actually be $108. ”
Saudi Aramco’s value has been estimated at as much as $7 trillion but is actually worth only $1.7 trillion. Whoops.
And don’t get me started on Canadian Tar Sands. Oh, Okay…
“Producing synthetic crude oil from tar sands generates three times the global warming pollution of conventional crude production. Extracting tar sands bitumen – a low-grade, high-sulfur crude oil that must be extensively refined to be turned into fuel – uses vast amounts of energy and water.”
Alberta tar sands “proven” reserves total 168 barrels but only 42 billion can be used. Since it’s three times as polluting, actually only 14 billion barrels or 8.3% of its “reserves” can be used.
Are these companies and nations severely overvalued… Only if humans are smart enough to live. Does this look like a bubble? The laissez faire capital market should be screaming “sell!”