Prior to his employment at Amoco, Mr. Johnston served as an economist with the RAND Corporation, the Institute for Defense Analyses, and the Secretary's Office of the U.S. Treasury. He served on the U.S. delegation to the United Nations Conference on the Law of the Sea.
Mr. Johnston's current research has focused on electric utility deregulation in Illinois and other states; pollution trading under the climate change treaty, Clean Air Act, and the RECLAIM system for the South Coast Air District; and a general theory of regulation, published in the Cato Institute's Regulation magazine.
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Never mind that The Heartland Institute and other global warming skeptics receive a trivial amount of funding from Big Oil. Moreover, large international oil companies such as Chevron, Shell, BP and Exxon are more likely to be supporters of the global warming hypothesis. Indeed, BP supplied the initial funding for the now discredited Climate Research Unit of the East Anglia University. (Check out www.Climategate.com.)
Now why would smart guys like Big Oil support the global warming scare? The answer is obvious. It is in their interest. You might think it is just public relations to cozy up to the government-funded projects that conclude that humans are causing most of the global warming by virtue of consuming fossil fuels. But in my opinion, as a former oil company economist, the interests of Big Oil are much deeper.
Look at the political agenda of the alarmists. They want the governments of the world to reduce the emissions of carbon dioxide by 80 percent by the end of the century. That corresponds roughly to an 80 percent reduction in the consumption of energy, including oil and natural gas. Think about it. If the worldwide supply of oil is restricted so that new production is halted, the remaining suppliers of oil will be largest holders of existing reserves. Moreover, the prices of energy will be two and a half time greater than otherwise, from what we know about demand elasticity. (What will happen is the energy supply curve will be shifted back along the highly inelastic demand curve.)
So, what do we have? The global warming alarmists are urging a huge reduction in energy consumption. If they are successful, it will cause the fortunes of Big Oil to increase substantially. The big losers will be the alarmists and … the rest of us.
[Editor: This post was edited for accuracy on Sunday, November 4.]