Monday, June 7, 2010

Incentives of oil companies ....

Oil companies and other firms in the US and the west like to tout their environmental record. But if they are strictly trying to maximize shareholder wealth, they should only protect the environment when it is value creating to do so. It could be value creating because of public perception, law suits, or regulation. Of course the companies will always say that they are doing the right thing because they love nature...

So one way to figure out what they really are thinking is to look at what they are doing when there is no threat of legal or regulatory action and when the local public opinion doesn't matter. Case in point: Nigeria.

http://www.guardian.co.uk/world/2010/may/30/oil-spills-nigeria-niger-delta-shell