Environmental Impact Of Hurricane Katrina On Murphy Oil Owned Mera

INTRODUCTION:

Oil is a major source of environment degradation. It pollutes the environment in its entire life cycle from the points of exploration & production (refineries), usage (vehicles) and end product (GHG, SOx, NOx and other air pollutants). According to a Nature Journal report, if we want to limit the global increase in temperature under 2C, we need to let close to 80% fuel reserves remain inside the earth. This proposal seems unreasonable in today’s world. The direct stakeholders who would stand against this are: all the major oil refineries around the globe, the major automobile producers (apart from Tesla) and the consumers who won’t stop using oil for their everyday needs till alternatives are made available at comparatively lower

One could argue they would never work towards curbing oil usage or production. This is no longer true and it is the investors in these refineries who are asking for change. The reason is simple: oil refineries also stand to lose with environmental change. Refineries are located very close to coastlines which puts them at risk due to rising ocean levels and increasing frequency of sea storms. Due to small profit margins, refineries are susceptible to large losses in this scenario. To give an idea of the potential losses, the impact of hurricane Katrina on Murphy Oil owned Meraux refinery was close to USD 330 million which is close to Murphy’s revenue in Q4, 2014.

Investors today are thus asking refineries to disclose this potential risk and show what is being done to help mitigate environment degradation. This was done by the investors of the biggest Oil firms in the US namely – Chevron, Exxon Mobil, Phillips 66, Marathon Petroleum & Valero. [1]

The change in investor sentiments has made even the biggest banks sit up and take notice. Banks like Goldman Sachs and Merrill Lynch are now moving towards SRI – sustainable, responsible and impact investments. Big ticket clients like insurance companies, public pension funds, universities and foundations want to move away from investing in oil because the returns so obtained are not

Limits to Growth talked about the effect inorganic growth of mankind has on earth’s limited resources. Randers says the reason why so little has been done on the issue of climate change other than talks is because there are no visible positive impacts. It would take sacrifices- monetary and otherwise from an entire generation on a large level before signs of positive changes are seen. This is where the democratic system fails to help the climate because working with a pro-climate agenda means higher taxes which invariably cause public outcry leading to political upheaval and no politician likes to lose over climate. Another reason is lack of collective ownership of the potential losses that environment degradation would cause. Compare this to the entirely private gains that companies make when they sell oil. Or which consumers make when they choose cheaper oil based products over more expensive but sustainable energy sources. Thus, delayed gratification falls short when pitted against the gains made by simply ignoring the climate