Climate Lawsuits Jack Up Consumer Prices, Threaten U.S. Security

Russia’s invasion of Ukraine is a reminder that energy security is both a national security issue and a household financial security issue.

When oil and gas prices go up for any reason, including due to supply-side constraints from this war, the nation struggles to find affordable alternative supplies and ends up buying energy from disagreeable and undemocratic foreign regimes, undoubtedly helping to prop them up. [bold, links added]

Everything energy related – from the price at the pump to the energy we consume to run air conditioners and before you know it, heat for the winter – has been skyrocketing.

When that happens, we should find ways to bring energy prices down, especially from domestic sources, instead of supporting frivolous litigious escapades that drive up prices.

Yet, the latter is exactly what we see happening with dozens of pending lawsuits in state and federal courts across the country brought in recent years by states, counties, and municipalities against fossil fuel companies.

The cases seek to hold these companies liable for climate change damages under novel theories of “public nuisance” and consumer fraud.

The cases are not only legally deficient but also effectively impose a tax on producing energy.

Even if the energy companies eventually win, the costs of the litigation alone drive up prices.

Further, even though the legal theories are flawed, the settlement pressures are huge, again threatening additional increases in the cost of doing business that will be passed on to consumers in the form of higher energy prices to cover the bounty.

The looseness of our standards for tort lawsuits is directly proportional to increased prices for consumer goods. This is the reason to see tort lawsuits as effectively taxes on goods.

Indeed, some of the activist plaintiffs in these climate lawsuits have expressly stated that one purpose of these lawsuits is to drive energy prices up to cut into profitability and reduce demand to hobble the fossil fuel industry.

In fact, some activists have acknowledged that they purposefully hope to directly harm not just companies but also consumers by making it hard for the average household to afford fossil fuel-based energy under a paternalistic desire to force these consumers to choose alternative sources.

This is the havoc wreaked when plaintiffs’ attorneys and other crusaders abuse the legal system for personal profit or political causes. The legal system is sometimes unabashedly manipulated by activists to try to effect social change.

Too often lost in the conversation is the tax the activists’ advocacy has on society as a whole, and how their efforts, if successful, impose costs on all of us in terms of increased prices caused by the liability and litigation costs they impose on producers of consumer goods.

These climate-change lawsuits are just the latest example of this effect.

Notably, these dozens of climate change lawsuits target almost exclusively U.S. and European energy companies (already the most regulated in the world) rather than the less environmentally sensitive operators such as Venezuela’s PDVSA, Russia’s Gazprom or Rosneft, or Saudi Arabia’s Aramco, which are much harder to get jurisdiction over in U.S. state and federal courts, in part because they are often foreign state-owned.

The consequence of this selectivity is that the privately held U.S. and European companies see their cost of doing business increase. That’s what litigation liability is — an added cost on production.

Of course, the companies not sued operating in dangerous and less environmentally sensitive countries do not face such costs. 

The natural consequence is that U.S. companies must increase prices and suffer a competitive disadvantage in the global energy market.

The resulting global competitive advantage these lawsuits offer to Venezuelan, Russian, Saudi Arabian, and other similar foreign companies increases their market power and helps prop up the often oppressive and aggressive regimes in which they operate.

This is destabilizing for the world and a real national security threat to the United States.

These lawsuits are dangerous and ungrounded, and we should hope the courts continue to recognize that. But because plaintiffs keep filing away and are clearly not getting the message that their cases are weak, more should be done.

Read rest at The Hill via MSN