Ever since I watched Robin Hood riding through a black-and-white cardboard glen, the BBC has enriched my life.

As an adult I grew to admire the technical artistry of wildlife programmes, and the remarkable courage of news correspondents like John Simpson and Kate Adie reporting from war zones. I cooked and cleaned while genuinely learning from Radio Four.

The respect for which viewers and listeners like me had for the BBC was earned through detailed research, fairness and expertise. 

Losing support

David Attenborough, arguably the world’s most respected presenter, has for decades exemplified the highest standards of integrity on which the nation has depended.

In recent years Professor Cox has enhanced our understanding of what it means to be human in a mysterious and fascinating world.

Yet now the Corporation responsible for such excellence has lost my admiration and support. It is with sadness, anxiety and growing anger that I ask why values so embedded in the BBC’s raison d’être have been compromised and abandoned.

The political bias is unmissable, risible, almost the stuff of satire – and that’s dangerous. It threatens democracy.

The rise of the Far Right began with the BBC platform that made Nigel Farage ubiquitous (see Question Time panel statistics). News often constitutes misinformation as the BBC takes its agenda and even its vocabulary from the predominantly right wing press.

Climate chaos

But I am writing about something even more serious, so dangerous as to threaten the future of life on earth.

Our most prestigious national broadcaster fails to acknowledge the overwhelming consensus of climate scientists. It almost never finds it necessary to share the causes, nature and potential outcomes of climate change these experts identify.

Calls for change to mitigate climate chaos are apparently banned. Instead, I observe a persistent and perverse determination to give a voice to climate deniers in spite of their statistical isolation, and a blithe or strategic head-in-sand approach to programming.

Weather presenters have smiled about sunshine through this summer, while new temperature records have been set in Africa and Australian cities, Taiwan, Georgia and the west coast of US, heat stroke or forest fires have killed (at least 119 in Japan).

We have seen freak blazes in Lapland and elsewhere in the Arctic Circle.

Informing and educating 

It became clear, after Blue Planet’s shocking exposé of plastic pollution, that the truth inspires in many of us immediate and committed changes of attitude and behaviour. By informing and educating us about climate change the BBC could be instrumental in our very survival.

Instead its silence sends out a clear message that there’s no problem. If we were at risk on this earth, the BBC would be telling us! 

Of course the government is guilty of pursuing an energy policy that accelerates climate crisis. It continues to subsidise fossil fuels, pursues fracking despite medical opinion as well as earth science. All this in spite of ever-mounting opposition, low and declining support and the rejection of proposals by local Councils.

Indeed no MP would support fracking in their constituency because every community would resist it. Yet, as the government threatens to push ahead and frack our countryside, we hear next to nothing of the reasons other countries and states have thought better of this reckless idea and agreed a moratorium or ban.

Presenters seem more interested in challenging Jeremy Corbyn on every move he makes and breath he takes than in challenging a government about to begin a hugely damaging practice that will destroy our chances of achieving the less-than-ambitious targets agreed in Paris.

Peace and justice

I am a Green Party member, but my interest is much less in party politics than in the survival of humanity, in peace and justice. I’m a Quaker and a grandma; I believe in acting on what love requires of us.

Visiting schools as an author, I’m acutely aware that the young who grow up in the knowledge of climate change wonder why the adults in charge – in government, but also in the media – ignore the truth and in doing so, jeopardise their future. 

I therefore suggest that in order to fulfil its responsibility at this crucial time in human history, the BBC needs to:

• Stop crediting climate deniers with a reasonable position when climate scientists are virtually unanimous in the expert conviction that climate change is real, dangerous and exacerbated by human activity;
• Stop referring to climate change as though it’s no more important than football, if somewhat inconvenient for gardeners, and as if nothing can be done to address it;
• Look into the political allegiances of key figures behind and on screen and ensure that there is no unrepresentative imbalance of opinion. While I’m tempted to ask that climate deniers make up no more than three percent of BBC staff, I would happily settle for minimum science qualifications for all those representing or presenting scientific data, news, weather or political debate. 
• Challenge government policies that endanger future generations with the same unshifting focus currently applied to Labour’s difficulties.
• Invite David Attenborough, Brian Cox and Chris Packham, all of whom agree on the vital need for action, to present the truth and inspire change.

Nothing has ever mattered more.

This Author 

Sue Hampton is an author writing fiction for children, teenagers and adults, all underpinned by green values. She lives in Berkhamsted, Herts, where she is a Trustee for People not Borders supporting refugees, a Green Party member and a co-founder of Plastic-Free Berko. 

Right of Reply 

A BBC spokesperson told The Ecologist: “The BBC is committed to covering all subjects, including climate change, with due impartiality. The term ‘due’ means that the impartiality must be adequate and appropriate to the output, taking account of the subject and nature of the content, the likely audience expectation and any signposting that may influence that expectation. This does not meant that there has to be equal balance between opposing views and the BBC is mindful of the findings of the 2011 BBC Trust review of impartiality in science coverage and its recommendations on due weight of opinion.

“In the case of climate change the BBC acknowledges the weight of scientific consensus around climate change and this underpins our reporting of the subject and we always seek to make this clear. This does not mean, however, that we should never interview someone who opposes this consensus and there are times when it is editorially appropriate to hear from a dissenting voice. The BBC is committed to reporting the facts and most recently has covered a range of climate change based [stories] such as the ‘Hothouse Earth’ scenario, pioneering climate change resistant farming and a study from the Nature Communications journal about rising temperatures.”

Friedrich von Hayek died in Freiburg, Germany, aged 92, on 23 March, 1992 – a few months after the Soviet Union voted for its own dissolution.

The funeral was attended by around one hundred family members and invited guests. It was a overcast and windy day. Vaclav Klaus, the finance minister and future prime minister of the former communist Czech Republic arrived late.

Hayek, the recipient of the Nobel Prize, had lived a fascinating life during a tumultuous period of history. He remained convinced of the “spontaneous order” of the free market and that inequality was an inescapable feature of human existence.

From his deathbed he told a reporter: “I believe in general that the idea of justice is more closely met by a freely competitive market than by any deliberate allocation of income to some imagined ideal of the kind”.

The Right Circumstances

His life is evidence of what a single man can achieve in the right circumstances, and as fellow neoliberal Antony Fisher would have said, the embodiment of the fact that ideas have consequences. He was awarded the presidential Medal of Freedom by President George Bush Senior in 1991, for example, but had been too frail to attend in person.

In 1947, Hayek founded the Mont Pelerin Society (MPS), an international group of economists, historians and philosophers; he was convinced the MPS was crucial to the triumph of neoliberalism around the world.

However, as his biographer Alan Ebenstein would note: “Hayek was virtually forgotten in England during the 1950s and ’60s. The London-based Institute of Economic Affairs [IEA]…became almost the only organisation that continued to promote him and his work in the country during this period.”

In the United States, Hayek would also be directly involved with the Foundation for Economic Education (FEE), the American Enterprise Institute, the Heritage Foundation and Cato Institute.

These think tanks, each tied to the Koch family’s fossil fortune, would each play a role in the rise of climate denial during the 1980s and ‘90s.

Not For All Men

Hayek’s free market philosophy did not mean total freedom for all men though.

He was, during his life, a keen supporter of General Augusto Pinochet, whose death squads tortured and murdered thousands of citizens following the overthrow of the democratically elected government of Salvador Allende in Chile during a military coup in 1973.

“Don’t confuse totalitarianism with authoritarianism,” Hayek said of Pinochet. “I don’t know of any totalitarian governments in Latin America.

“The only one was Chile under Allende. Chile is now a great success. The world shall come to regard the recovery of Chile as one of the great economic miracles of our time.”

Communism, therefore, was not despised because of the violence of revolution but instead because it posed a real threat to the private property of the wealthy.

Hayek believed that only people who were over the age of 45 should be allowed to vote, and that people receiving benefits should have the right withdrawn.

Neighbourhood Effects

However, Hayek also considered himself an environmentalist: he supported the World Wildlife Fund and the National Trust in the UK.

He had argued that it is “often impossible to confine the effects of what one does to one’s own land to this particular piece; and hence arises those ‘neighbourhood effects’ which will not be taken into account so long as the owner has to consider only the effects on his property. Hence also the problems which arise with respect to the pollution of air or water and the like.”

This statement should light the way for those who now claim to carry his flame.

This Author

Brendan Montague is editor of The Ecologist, founder of Request Initiative and co-author of Impact of Market Forces on Addictive Substances and Behaviours: The web of influence of addictive industries (Oxford University Press). He tweets at @EcoMontague. This article first appeared at Desmog.uk. 

Following a long slump, crude prices have rebounded to about US$70  per barrel. That may make 2018 the most profitable year for oil and gas companies in at least four years.

Will oil and gas executives reap big rewards as well?

As energy economists, we’ve wondered how much the top oil and gas executives earn, particularly when their companies are earning large profits. To spot the patterns, we analyzed data on the compensation of more than 900 U.S. oil and gas executives between 1992 and 2016.

Critical decisions

Before getting to the evidence, it is worth considering what executives do in general, and how they get compensated.

Chief executive officers, chief financial officers and other C-level executives make important strategic decisions. If they act wisely, their companies are more likely to succeed and earn bigger profits. Oil and gas executives, for example, make critical decisions about where, when and how much to invest.

In many industries, the decisions executives make can also impact the prices their companies can charge.

For example, Apple’s ability to charge $1,000 (US dollars) for an iPhone X reflects in part the skills of CEO Tim Cook and other Apple executives at developing a desirable product and marketing it. But in a global commodity market like oil, executives have zero control over price. No matter how talented CEOs are, or how hard they work, they can’t singlehandedly make oil prices rise.

In economic parlance, hiring an executive is a principal-agent problem. The board of directors, the principal, hires an executive, the agent, to act on its behalf. The principal wants the agent to work hard and to make good decisions, but it is hard to measure this effort.

Instead, executive compensation typically includes incentives like bonuses, stock options and other forms of pay, designed to align the interests of the executive with the interests of the company.

Paying for luck

The Nobel Prize-winning economist Bengt Holmstrom pointed out, however, that it makes no sense for executive compensation to depend on what other scholars have since called “observable luck.” 

Tying compensation to luck just makes compensation more volatile, which in turn makes both companies and executives worse off. Holmstrom and others have found it easy to remove luck from compensation by, for example, basing compensation on a company’s performance relative to its competitors.

Oil prices are the classic example of observable luck. We looked, in particular, at U.S. oil and gas production companies, because these are the ones most impacted by oil prices. We excluded companies engaged partially or exclusively in oil refining – including Valero Energy, Chevron and Exxon Mobil, because the impact of oil prices is less clear and direct on that line of business.

We found that a 10 percent rise in oil prices increases the market value of these oil and gas production companies by 9.9 percent – almost a 1-for-1 relationship. Perhaps in no other industry are so many companies’ fortunes driven by a single global price.

More surprising, however, we determined that executive compensation follows a similar pattern. In particular, a 10 percent rise in oil prices increases executive compensation by 2 percent.

Asymmetrical pattern

That is, we find strong evidence of a “pay-for-luck” dynamic, with large rewards to executives who happen to be in the industry at the right time. 

We found this pay-for-luck pattern to be widespread across the different individual components of compensation for the top five executives at oil and gas companies. This includes not only stocks and options, but also bonuses and long-term cash incentives. 

We also noticed that this pattern is asymmetrical.

Executive compensation rises more with increasing oil prices than it falls with decreasing oil prices. This is consistent with anecdotal evidence that the criteria used for executive compensation changes over time. And that they are more quantitative during “boom” times and more qualitative during “bust” times.

In other words, U.S. oil and gas executives reap big rewards, when prices go up and they aren’t punished that much when prices fall.

Rent extraction

Everyone in the industry understands that oil prices are highly variable and completely out of the control of individual executives. So why do executives earn more when oil prices go up? 

The most likely explanation is that these CEOs and other top executives have co-opted the pay-setting process. Economists call this “rent extraction.”

That is, at least to some degree, executives are exercising influence over the board of directors – extracting compensation packages that exceed what would be expected in a competitive labor market. 

And the compensation of all oil and gas executives in our sample, all told, totals almost $1 billion (US dollars) per year, making the money at stake substantial. 

With median pay for U.S. CEOs nearly $12 million (US dollars) per year, executive compensation has become more complicated and important to understand than ever. Understanding pay-for-luck dynamics in the oil and gas industry can also shed light on what happens in other businesses where luck plays a less obvious, but often equally important, role.

This Author 

Catherine Hausman is an assistant professor in the School of Public Policy and a faculty research fellow at the National Bureau of Economics Research. Her work focusses on environmental and energy economics.

Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley, and faculty director of the Energy Institute at Haas.

 This story was first published by The Conversation.

Ever since I watched Robin Hood riding through a black-and-white cardboard glen, the BBC has enriched my life.

As an adult I grew to admire the technical artistry of wildlife programmes, and the remarkable courage of news correspondents like John Simpson and Kate Adie reporting from war zones. I cooked and cleaned while genuinely learning from Radio Four.

The respect for which viewers and listeners like me had for the BBC was earned through detailed research, fairness and expertise. 

Losing support

David Attenborough, arguably the world’s most respected presenter, has for decades exemplified the highest standards of integrity on which the nation has depended.

In recent years Professor Cox has enhanced our understanding of what it means to be human in a mysterious and fascinating world.

Yet now the Corporation responsible for such excellence has lost my admiration and support. It is with sadness, anxiety and growing anger that I ask why values so embedded in the BBC’s raison d’être have been compromised and abandoned.

The political bias is unmissable, risible, almost the stuff of satire – and that’s dangerous. It threatens democracy.

The rise of the Far Right began with the BBC platform that made Nigel Farage ubiquitous (see Question Time panel statistics). News often constitutes misinformation as the BBC takes its agenda and even its vocabulary from the predominantly right wing press.

Climate chaos

But I am writing about something even more serious, so dangerous as to threaten the future of life on earth.

Our most prestigious national broadcaster fails to acknowledge the overwhelming consensus of climate scientists. It almost never finds it necessary to share the causes, nature and potential outcomes of climate change these experts identify.

Calls for change to mitigate climate chaos are apparently banned. Instead, I observe a persistent and perverse determination to give a voice to climate deniers in spite of their statistical isolation, and a blithe or strategic head-in-sand approach to programming.

Weather presenters have smiled about sunshine through this summer, while new temperature records have been set in Africa and Australian cities, Taiwan, Georgia and the west coast of US, heat stroke or forest fires have killed (at least 119 in Japan).

We have seen freak blazes in Lapland and elsewhere in the Arctic Circle.

Informing and educating 

It became clear, after Blue Planet’s shocking exposé of plastic pollution, that the truth inspires in many of us immediate and committed changes of attitude and behaviour. By informing and educating us about climate change the BBC could be instrumental in our very survival.

Instead its silence sends out a clear message that there’s no problem. If we were at risk on this earth, the BBC would be telling us! 

Of course the government is guilty of pursuing an energy policy that accelerates climate crisis. It continues to subsidise fossil fuels, pursues fracking despite medical opinion as well as earth science. All this in spite of ever-mounting opposition, low and declining support and the rejection of proposals by local Councils.

Indeed no MP would support fracking in their constituency because every community would resist it. Yet, as the government threatens to push ahead and frack our countryside, we hear next to nothing of the reasons other countries and states have thought better of this reckless idea and agreed a moratorium or ban.

Presenters seem more interested in challenging Jeremy Corbyn on every move he makes and breath he takes than in challenging a government about to begin a hugely damaging practice that will destroy our chances of achieving the less-than-ambitious targets agreed in Paris.

Peace and justice

I am a Green Party member, but my interest is much less in party politics than in the survival of humanity, in peace and justice. I’m a Quaker and a grandma; I believe in acting on what love requires of us.

Visiting schools as an author, I’m acutely aware that the young who grow up in the knowledge of climate change wonder why the adults in charge – in government, but also in the media – ignore the truth and in doing so, jeopardise their future. 

I therefore suggest that in order to fulfil its responsibility at this crucial time in human history, the BBC needs to:

• Stop crediting climate deniers with a reasonable position when climate scientists are virtually unanimous in the expert conviction that climate change is real, dangerous and exacerbated by human activity;
• Stop referring to climate change as though it’s no more important than football, if somewhat inconvenient for gardeners, and as if nothing can be done to address it;
• Look into the political allegiances of key figures behind and on screen and ensure that there is no unrepresentative imbalance of opinion. While I’m tempted to ask that climate deniers make up no more than three percent of BBC staff, I would happily settle for minimum science qualifications for all those representing or presenting scientific data, news, weather or political debate. 
• Challenge government policies that endanger future generations with the same unshifting focus currently applied to Labour’s difficulties.
• Invite David Attenborough, Brian Cox and Chris Packham, all of whom agree on the vital need for action, to present the truth and inspire change.

Nothing has ever mattered more.

This Author 

Sue Hampton is an author writing fiction for children, teenagers and adults, all underpinned by green values. She lives in Berkhamsted, Herts, where she is a Trustee for People not Borders supporting refugees, a Green Party member and a co-founder of Plastic-Free Berko. 

Right of Reply 

A BBC spokesperson told The Ecologist: “The BBC is committed to covering all subjects, including climate change, with due impartiality. The term ‘due’ means that the impartiality must be adequate and appropriate to the output, taking account of the subject and nature of the content, the likely audience expectation and any signposting that may influence that expectation. This does not meant that there has to be equal balance between opposing views and the BBC is mindful of the findings of the 2011 BBC Trust review of impartiality in science coverage and its recommendations on due weight of opinion.

“In the case of climate change the BBC acknowledges the weight of scientific consensus around climate change and this underpins our reporting of the subject and we always seek to make this clear. This does not mean, however, that we should never interview someone who opposes this consensus and there are times when it is editorially appropriate to hear from a dissenting voice. The BBC is committed to reporting the facts and most recently has covered a range of climate change based [stories] such as the ‘Hothouse Earth’ scenario, pioneering climate change resistant farming and a study from the Nature Communications journal about rising temperatures.”

Friedrich von Hayek died in Freiburg, Germany, aged 92, on 23 March, 1992 – a few months after the Soviet Union voted for its own dissolution.

The funeral was attended by around one hundred family members and invited guests. It was a overcast and windy day. Vaclav Klaus, the finance minister and future prime minister of the former communist Czech Republic arrived late.

Hayek, the recipient of the Nobel Prize, had lived a fascinating life during a tumultuous period of history. He remained convinced of the “spontaneous order” of the free market and that inequality was an inescapable feature of human existence.

From his deathbed he told a reporter: “I believe in general that the idea of justice is more closely met by a freely competitive market than by any deliberate allocation of income to some imagined ideal of the kind”.

The Right Circumstances

His life is evidence of what a single man can achieve in the right circumstances, and as fellow neoliberal Antony Fisher would have said, the embodiment of the fact that ideas have consequences. He was awarded the presidential Medal of Freedom by President George Bush Senior in 1991, for example, but had been too frail to attend in person.

In 1947, Hayek founded the Mont Pelerin Society (MPS), an international group of economists, historians and philosophers; he was convinced the MPS was crucial to the triumph of neoliberalism around the world.

However, as his biographer Alan Ebenstein would note: “Hayek was virtually forgotten in England during the 1950s and ’60s. The London-based Institute of Economic Affairs [IEA]…became almost the only organisation that continued to promote him and his work in the country during this period.”

In the United States, Hayek would also be directly involved with the Foundation for Economic Education (FEE), the American Enterprise Institute, the Heritage Foundation and Cato Institute.

These think tanks, each tied to the Koch family’s fossil fortune, would each play a role in the rise of climate denial during the 1980s and ‘90s.

Not For All Men

Hayek’s free market philosophy did not mean total freedom for all men though.

He was, during his life, a keen supporter of General Augusto Pinochet, whose death squads tortured and murdered thousands of citizens following the overthrow of the democratically elected government of Salvador Allende in Chile during a military coup in 1973.

“Don’t confuse totalitarianism with authoritarianism,” Hayek said of Pinochet. “I don’t know of any totalitarian governments in Latin America.

“The only one was Chile under Allende. Chile is now a great success. The world shall come to regard the recovery of Chile as one of the great economic miracles of our time.”

Communism, therefore, was not despised because of the violence of revolution but instead because it posed a real threat to the private property of the wealthy.

Hayek believed that only people who were over the age of 45 should be allowed to vote, and that people receiving benefits should have the right withdrawn.

Neighbourhood Effects

However, Hayek also considered himself an environmentalist: he supported the World Wildlife Fund and the National Trust in the UK.

He had argued that it is “often impossible to confine the effects of what one does to one’s own land to this particular piece; and hence arises those ‘neighbourhood effects’ which will not be taken into account so long as the owner has to consider only the effects on his property. Hence also the problems which arise with respect to the pollution of air or water and the like.”

This statement should light the way for those who now claim to carry his flame.

This Author

Brendan Montague is editor of The Ecologist, founder of Request Initiative and co-author of Impact of Market Forces on Addictive Substances and Behaviours: The web of influence of addictive industries (Oxford University Press). He tweets at @EcoMontague. This article first appeared at Desmog.uk. 

Following a long slump, crude prices have rebounded to about US$70  per barrel. That may make 2018 the most profitable year for oil and gas companies in at least four years.

Will oil and gas executives reap big rewards as well?

As energy economists, we’ve wondered how much the top oil and gas executives earn, particularly when their companies are earning large profits. To spot the patterns, we analyzed data on the compensation of more than 900 U.S. oil and gas executives between 1992 and 2016.

Critical decisions

Before getting to the evidence, it is worth considering what executives do in general, and how they get compensated.

Chief executive officers, chief financial officers and other C-level executives make important strategic decisions. If they act wisely, their companies are more likely to succeed and earn bigger profits. Oil and gas executives, for example, make critical decisions about where, when and how much to invest.

In many industries, the decisions executives make can also impact the prices their companies can charge.

For example, Apple’s ability to charge $1,000 (US dollars) for an iPhone X reflects in part the skills of CEO Tim Cook and other Apple executives at developing a desirable product and marketing it. But in a global commodity market like oil, executives have zero control over price. No matter how talented CEOs are, or how hard they work, they can’t singlehandedly make oil prices rise.

In economic parlance, hiring an executive is a principal-agent problem. The board of directors, the principal, hires an executive, the agent, to act on its behalf. The principal wants the agent to work hard and to make good decisions, but it is hard to measure this effort.

Instead, executive compensation typically includes incentives like bonuses, stock options and other forms of pay, designed to align the interests of the executive with the interests of the company.

Paying for luck

The Nobel Prize-winning economist Bengt Holmstrom pointed out, however, that it makes no sense for executive compensation to depend on what other scholars have since called “observable luck.” 

Tying compensation to luck just makes compensation more volatile, which in turn makes both companies and executives worse off. Holmstrom and others have found it easy to remove luck from compensation by, for example, basing compensation on a company’s performance relative to its competitors.

Oil prices are the classic example of observable luck. We looked, in particular, at U.S. oil and gas production companies, because these are the ones most impacted by oil prices. We excluded companies engaged partially or exclusively in oil refining – including Valero Energy, Chevron and Exxon Mobil, because the impact of oil prices is less clear and direct on that line of business.

We found that a 10 percent rise in oil prices increases the market value of these oil and gas production companies by 9.9 percent – almost a 1-for-1 relationship. Perhaps in no other industry are so many companies’ fortunes driven by a single global price.

More surprising, however, we determined that executive compensation follows a similar pattern. In particular, a 10 percent rise in oil prices increases executive compensation by 2 percent.

Asymmetrical pattern

That is, we find strong evidence of a “pay-for-luck” dynamic, with large rewards to executives who happen to be in the industry at the right time. 

We found this pay-for-luck pattern to be widespread across the different individual components of compensation for the top five executives at oil and gas companies. This includes not only stocks and options, but also bonuses and long-term cash incentives. 

We also noticed that this pattern is asymmetrical.

Executive compensation rises more with increasing oil prices than it falls with decreasing oil prices. This is consistent with anecdotal evidence that the criteria used for executive compensation changes over time. And that they are more quantitative during “boom” times and more qualitative during “bust” times.

In other words, U.S. oil and gas executives reap big rewards, when prices go up and they aren’t punished that much when prices fall.

Rent extraction

Everyone in the industry understands that oil prices are highly variable and completely out of the control of individual executives. So why do executives earn more when oil prices go up? 

The most likely explanation is that these CEOs and other top executives have co-opted the pay-setting process. Economists call this “rent extraction.”

That is, at least to some degree, executives are exercising influence over the board of directors – extracting compensation packages that exceed what would be expected in a competitive labor market. 

And the compensation of all oil and gas executives in our sample, all told, totals almost $1 billion (US dollars) per year, making the money at stake substantial. 

With median pay for U.S. CEOs nearly $12 million (US dollars) per year, executive compensation has become more complicated and important to understand than ever. Understanding pay-for-luck dynamics in the oil and gas industry can also shed light on what happens in other businesses where luck plays a less obvious, but often equally important, role.

This Author 

Catherine Hausman is an assistant professor in the School of Public Policy and a faculty research fellow at the National Bureau of Economics Research. Her work focusses on environmental and energy economics.

Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley, and faculty director of the Energy Institute at Haas.

 This story was first published by The Conversation.

Ever since I watched Robin Hood riding through a black-and-white cardboard glen, the BBC has enriched my life.

As an adult I grew to admire the technical artistry of wildlife programmes, and the remarkable courage of news correspondents like John Simpson and Kate Adie reporting from war zones. I cooked and cleaned while genuinely learning from Radio Four.

The respect for which viewers and listeners like me had for the BBC was earned through detailed research, fairness and expertise. 

Losing support

David Attenborough, arguably the world’s most respected presenter, has for decades exemplified the highest standards of integrity on which the nation has depended.

In recent years Professor Cox has enhanced our understanding of what it means to be human in a mysterious and fascinating world.

Yet now the Corporation responsible for such excellence has lost my admiration and support. It is with sadness, anxiety and growing anger that I ask why values so embedded in the BBC’s raison d’être have been compromised and abandoned.

The political bias is unmissable, risible, almost the stuff of satire – and that’s dangerous. It threatens democracy.

The rise of the Far Right began with the BBC platform that made Nigel Farage ubiquitous (see Question Time panel statistics). News often constitutes misinformation as the BBC takes its agenda and even its vocabulary from the predominantly right wing press.

Climate chaos

But I am writing about something even more serious, so dangerous as to threaten the future of life on earth.

Our most prestigious national broadcaster fails to acknowledge the overwhelming consensus of climate scientists. It almost never finds it necessary to share the causes, nature and potential outcomes of climate change these experts identify.

Calls for change to mitigate climate chaos are apparently banned. Instead, I observe a persistent and perverse determination to give a voice to climate deniers in spite of their statistical isolation, and a blithe or strategic head-in-sand approach to programming.

Weather presenters have smiled about sunshine through this summer, while new temperature records have been set in Africa and Australian cities, Taiwan, Georgia and the west coast of US, heat stroke or forest fires have killed (at least 119 in Japan).

We have seen freak blazes in Lapland and elsewhere in the Arctic Circle.

Informing and educating 

It became clear, after Blue Planet’s shocking exposé of plastic pollution, that the truth inspires in many of us immediate and committed changes of attitude and behaviour. By informing and educating us about climate change the BBC could be instrumental in our very survival.

Instead its silence sends out a clear message that there’s no problem. If we were at risk on this earth, the BBC would be telling us! 

Of course the government is guilty of pursuing an energy policy that accelerates climate crisis. It continues to subsidise fossil fuels, pursues fracking despite medical opinion as well as earth science. All this in spite of ever-mounting opposition, low and declining support and the rejection of proposals by local Councils.

Indeed no MP would support fracking in their constituency because every community would resist it. Yet, as the government threatens to push ahead and frack our countryside, we hear next to nothing of the reasons other countries and states have thought better of this reckless idea and agreed a moratorium or ban.

Presenters seem more interested in challenging Jeremy Corbyn on every move he makes and breath he takes than in challenging a government about to begin a hugely damaging practice that will destroy our chances of achieving the less-than-ambitious targets agreed in Paris.

Peace and justice

I am a Green Party member, but my interest is much less in party politics than in the survival of humanity, in peace and justice. I’m a Quaker and a grandma; I believe in acting on what love requires of us.

Visiting schools as an author, I’m acutely aware that the young who grow up in the knowledge of climate change wonder why the adults in charge – in government, but also in the media – ignore the truth and in doing so, jeopardise their future. 

I therefore suggest that in order to fulfil its responsibility at this crucial time in human history, the BBC needs to:

• Stop crediting climate deniers with a reasonable position when climate scientists are virtually unanimous in the expert conviction that climate change is real, dangerous and exacerbated by human activity;
• Stop referring to climate change as though it’s no more important than football, if somewhat inconvenient for gardeners, and as if nothing can be done to address it;
• Look into the political allegiances of key figures behind and on screen and ensure that there is no unrepresentative imbalance of opinion. While I’m tempted to ask that climate deniers make up no more than three percent of BBC staff, I would happily settle for minimum science qualifications for all those representing or presenting scientific data, news, weather or political debate. 
• Challenge government policies that endanger future generations with the same unshifting focus currently applied to Labour’s difficulties.
• Invite David Attenborough, Brian Cox and Chris Packham, all of whom agree on the vital need for action, to present the truth and inspire change.

Nothing has ever mattered more.

This Author 

Sue Hampton is an author writing fiction for children, teenagers and adults, all underpinned by green values. She lives in Berkhamsted, Herts, where she is a Trustee for People not Borders supporting refugees, a Green Party member and a co-founder of Plastic-Free Berko. 

Right of Reply 

A BBC spokesperson told The Ecologist: “The BBC is committed to covering all subjects, including climate change, with due impartiality. The term ‘due’ means that the impartiality must be adequate and appropriate to the output, taking account of the subject and nature of the content, the likely audience expectation and any signposting that may influence that expectation. This does not meant that there has to be equal balance between opposing views and the BBC is mindful of the findings of the 2011 BBC Trust review of impartiality in science coverage and its recommendations on due weight of opinion.

“In the case of climate change the BBC acknowledges the weight of scientific consensus around climate change and this underpins our reporting of the subject and we always seek to make this clear. This does not mean, however, that we should never interview someone who opposes this consensus and there are times when it is editorially appropriate to hear from a dissenting voice. The BBC is committed to reporting the facts and most recently has covered a range of climate change based [stories] such as the ‘Hothouse Earth’ scenario, pioneering climate change resistant farming and a study from the Nature Communications journal about rising temperatures.”

Friedrich von Hayek died in Freiburg, Germany, aged 92, on 23 March, 1992 – a few months after the Soviet Union voted for its own dissolution.

The funeral was attended by around one hundred family members and invited guests. It was a overcast and windy day. Vaclav Klaus, the finance minister and future prime minister of the former communist Czech Republic arrived late.

Hayek, the recipient of the Nobel Prize, had lived a fascinating life during a tumultuous period of history. He remained convinced of the “spontaneous order” of the free market and that inequality was an inescapable feature of human existence.

From his deathbed he told a reporter: “I believe in general that the idea of justice is more closely met by a freely competitive market than by any deliberate allocation of income to some imagined ideal of the kind”.

The Right Circumstances

His life is evidence of what a single man can achieve in the right circumstances, and as fellow neoliberal Antony Fisher would have said, the embodiment of the fact that ideas have consequences. He was awarded the presidential Medal of Freedom by President George Bush Senior in 1991, for example, but had been too frail to attend in person.

In 1947, Hayek founded the Mont Pelerin Society (MPS), an international group of economists, historians and philosophers; he was convinced the MPS was crucial to the triumph of neoliberalism around the world.

However, as his biographer Alan Ebenstein would note: “Hayek was virtually forgotten in England during the 1950s and ’60s. The London-based Institute of Economic Affairs [IEA]…became almost the only organisation that continued to promote him and his work in the country during this period.”

In the United States, Hayek would also be directly involved with the Foundation for Economic Education (FEE), the American Enterprise Institute, the Heritage Foundation and Cato Institute.

These think tanks, each tied to the Koch family’s fossil fortune, would each play a role in the rise of climate denial during the 1980s and ‘90s.

Not For All Men

Hayek’s free market philosophy did not mean total freedom for all men though.

He was, during his life, a keen supporter of General Augusto Pinochet, whose death squads tortured and murdered thousands of citizens following the overthrow of the democratically elected government of Salvador Allende in Chile during a military coup in 1973.

“Don’t confuse totalitarianism with authoritarianism,” Hayek said of Pinochet. “I don’t know of any totalitarian governments in Latin America.

“The only one was Chile under Allende. Chile is now a great success. The world shall come to regard the recovery of Chile as one of the great economic miracles of our time.”

Communism, therefore, was not despised because of the violence of revolution but instead because it posed a real threat to the private property of the wealthy.

Hayek believed that only people who were over the age of 45 should be allowed to vote, and that people receiving benefits should have the right withdrawn.

Neighbourhood Effects

However, Hayek also considered himself an environmentalist: he supported the World Wildlife Fund and the National Trust in the UK.

He had argued that it is “often impossible to confine the effects of what one does to one’s own land to this particular piece; and hence arises those ‘neighbourhood effects’ which will not be taken into account so long as the owner has to consider only the effects on his property. Hence also the problems which arise with respect to the pollution of air or water and the like.”

This statement should light the way for those who now claim to carry his flame.

This Author

Brendan Montague is editor of The Ecologist, founder of Request Initiative and co-author of Impact of Market Forces on Addictive Substances and Behaviours: The web of influence of addictive industries (Oxford University Press). He tweets at @EcoMontague. This article first appeared at Desmog.uk. 

Following a long slump, crude prices have rebounded to about US$70  per barrel. That may make 2018 the most profitable year for oil and gas companies in at least four years.

Will oil and gas executives reap big rewards as well?

As energy economists, we’ve wondered how much the top oil and gas executives earn, particularly when their companies are earning large profits. To spot the patterns, we analyzed data on the compensation of more than 900 U.S. oil and gas executives between 1992 and 2016.

Critical decisions

Before getting to the evidence, it is worth considering what executives do in general, and how they get compensated.

Chief executive officers, chief financial officers and other C-level executives make important strategic decisions. If they act wisely, their companies are more likely to succeed and earn bigger profits. Oil and gas executives, for example, make critical decisions about where, when and how much to invest.

In many industries, the decisions executives make can also impact the prices their companies can charge.

For example, Apple’s ability to charge $1,000 (US dollars) for an iPhone X reflects in part the skills of CEO Tim Cook and other Apple executives at developing a desirable product and marketing it. But in a global commodity market like oil, executives have zero control over price. No matter how talented CEOs are, or how hard they work, they can’t singlehandedly make oil prices rise.

In economic parlance, hiring an executive is a principal-agent problem. The board of directors, the principal, hires an executive, the agent, to act on its behalf. The principal wants the agent to work hard and to make good decisions, but it is hard to measure this effort.

Instead, executive compensation typically includes incentives like bonuses, stock options and other forms of pay, designed to align the interests of the executive with the interests of the company.

Paying for luck

The Nobel Prize-winning economist Bengt Holmstrom pointed out, however, that it makes no sense for executive compensation to depend on what other scholars have since called “observable luck.” 

Tying compensation to luck just makes compensation more volatile, which in turn makes both companies and executives worse off. Holmstrom and others have found it easy to remove luck from compensation by, for example, basing compensation on a company’s performance relative to its competitors.

Oil prices are the classic example of observable luck. We looked, in particular, at U.S. oil and gas production companies, because these are the ones most impacted by oil prices. We excluded companies engaged partially or exclusively in oil refining – including Valero Energy, Chevron and Exxon Mobil, because the impact of oil prices is less clear and direct on that line of business.

We found that a 10 percent rise in oil prices increases the market value of these oil and gas production companies by 9.9 percent – almost a 1-for-1 relationship. Perhaps in no other industry are so many companies’ fortunes driven by a single global price.

More surprising, however, we determined that executive compensation follows a similar pattern. In particular, a 10 percent rise in oil prices increases executive compensation by 2 percent.

Asymmetrical pattern

That is, we find strong evidence of a “pay-for-luck” dynamic, with large rewards to executives who happen to be in the industry at the right time. 

We found this pay-for-luck pattern to be widespread across the different individual components of compensation for the top five executives at oil and gas companies. This includes not only stocks and options, but also bonuses and long-term cash incentives. 

We also noticed that this pattern is asymmetrical.

Executive compensation rises more with increasing oil prices than it falls with decreasing oil prices. This is consistent with anecdotal evidence that the criteria used for executive compensation changes over time. And that they are more quantitative during “boom” times and more qualitative during “bust” times.

In other words, U.S. oil and gas executives reap big rewards, when prices go up and they aren’t punished that much when prices fall.

Rent extraction

Everyone in the industry understands that oil prices are highly variable and completely out of the control of individual executives. So why do executives earn more when oil prices go up? 

The most likely explanation is that these CEOs and other top executives have co-opted the pay-setting process. Economists call this “rent extraction.”

That is, at least to some degree, executives are exercising influence over the board of directors – extracting compensation packages that exceed what would be expected in a competitive labor market. 

And the compensation of all oil and gas executives in our sample, all told, totals almost $1 billion (US dollars) per year, making the money at stake substantial. 

With median pay for U.S. CEOs nearly $12 million (US dollars) per year, executive compensation has become more complicated and important to understand than ever. Understanding pay-for-luck dynamics in the oil and gas industry can also shed light on what happens in other businesses where luck plays a less obvious, but often equally important, role.

This Author 

Catherine Hausman is an assistant professor in the School of Public Policy and a faculty research fellow at the National Bureau of Economics Research. Her work focusses on environmental and energy economics.

Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley, and faculty director of the Energy Institute at Haas.

 This story was first published by The Conversation.

Ever since I watched Robin Hood riding through a black-and-white cardboard glen, the BBC has enriched my life.

As an adult I grew to admire the technical artistry of wildlife programmes, and the remarkable courage of news correspondents like John Simpson and Kate Adie reporting from war zones. I cooked and cleaned while genuinely learning from Radio Four.

The respect for which viewers and listeners like me had for the BBC was earned through detailed research, fairness and expertise. 

Losing support

David Attenborough, arguably the world’s most respected presenter, has for decades exemplified the highest standards of integrity on which the nation has depended.

In recent years Professor Cox has enhanced our understanding of what it means to be human in a mysterious and fascinating world.

Yet now the Corporation responsible for such excellence has lost my admiration and support. It is with sadness, anxiety and growing anger that I ask why values so embedded in the BBC’s raison d’être have been compromised and abandoned.

The political bias is unmissable, risible, almost the stuff of satire – and that’s dangerous. It threatens democracy.

The rise of the Far Right began with the BBC platform that made Nigel Farage ubiquitous (see Question Time panel statistics). News often constitutes misinformation as the BBC takes its agenda and even its vocabulary from the predominantly right wing press.

Climate chaos

But I am writing about something even more serious, so dangerous as to threaten the future of life on earth.

Our most prestigious national broadcaster fails to acknowledge the overwhelming consensus of climate scientists. It almost never finds it necessary to share the causes, nature and potential outcomes of climate change these experts identify.

Calls for change to mitigate climate chaos are apparently banned. Instead, I observe a persistent and perverse determination to give a voice to climate deniers in spite of their statistical isolation, and a blithe or strategic head-in-sand approach to programming.

Weather presenters have smiled about sunshine through this summer, while new temperature records have been set in Africa and Australian cities, Taiwan, Georgia and the west coast of US, heat stroke or forest fires have killed (at least 119 in Japan).

We have seen freak blazes in Lapland and elsewhere in the Arctic Circle.

Informing and educating 

It became clear, after Blue Planet’s shocking exposé of plastic pollution, that the truth inspires in many of us immediate and committed changes of attitude and behaviour. By informing and educating us about climate change the BBC could be instrumental in our very survival.

Instead its silence sends out a clear message that there’s no problem. If we were at risk on this earth, the BBC would be telling us! 

Of course the government is guilty of pursuing an energy policy that accelerates climate crisis. It continues to subsidise fossil fuels, pursues fracking despite medical opinion as well as earth science. All this in spite of ever-mounting opposition, low and declining support and the rejection of proposals by local Councils.

Indeed no MP would support fracking in their constituency because every community would resist it. Yet, as the government threatens to push ahead and frack our countryside, we hear next to nothing of the reasons other countries and states have thought better of this reckless idea and agreed a moratorium or ban.

Presenters seem more interested in challenging Jeremy Corbyn on every move he makes and breath he takes than in challenging a government about to begin a hugely damaging practice that will destroy our chances of achieving the less-than-ambitious targets agreed in Paris.

Peace and justice

I am a Green Party member, but my interest is much less in party politics than in the survival of humanity, in peace and justice. I’m a Quaker and a grandma; I believe in acting on what love requires of us.

Visiting schools as an author, I’m acutely aware that the young who grow up in the knowledge of climate change wonder why the adults in charge – in government, but also in the media – ignore the truth and in doing so, jeopardise their future. 

I therefore suggest that in order to fulfil its responsibility at this crucial time in human history, the BBC needs to:

• Stop crediting climate deniers with a reasonable position when climate scientists are virtually unanimous in the expert conviction that climate change is real, dangerous and exacerbated by human activity;
• Stop referring to climate change as though it’s no more important than football, if somewhat inconvenient for gardeners, and as if nothing can be done to address it;
• Look into the political allegiances of key figures behind and on screen and ensure that there is no unrepresentative imbalance of opinion. While I’m tempted to ask that climate deniers make up no more than three percent of BBC staff, I would happily settle for minimum science qualifications for all those representing or presenting scientific data, news, weather or political debate. 
• Challenge government policies that endanger future generations with the same unshifting focus currently applied to Labour’s difficulties.
• Invite David Attenborough, Brian Cox and Chris Packham, all of whom agree on the vital need for action, to present the truth and inspire change.

Nothing has ever mattered more.

This Author 

Sue Hampton is an author writing fiction for children, teenagers and adults, all underpinned by green values. She lives in Berkhamsted, Herts, where she is a Trustee for People not Borders supporting refugees, a Green Party member and a co-founder of Plastic-Free Berko. 

Right of Reply 

A BBC spokesperson told The Ecologist: “The BBC is committed to covering all subjects, including climate change, with due impartiality. The term ‘due’ means that the impartiality must be adequate and appropriate to the output, taking account of the subject and nature of the content, the likely audience expectation and any signposting that may influence that expectation. This does not meant that there has to be equal balance between opposing views and the BBC is mindful of the findings of the 2011 BBC Trust review of impartiality in science coverage and its recommendations on due weight of opinion.

“In the case of climate change the BBC acknowledges the weight of scientific consensus around climate change and this underpins our reporting of the subject and we always seek to make this clear. This does not mean, however, that we should never interview someone who opposes this consensus and there are times when it is editorially appropriate to hear from a dissenting voice. The BBC is committed to reporting the facts and most recently has covered a range of climate change based [stories] such as the ‘Hothouse Earth’ scenario, pioneering climate change resistant farming and a study from the Nature Communications journal about rising temperatures.”