BP, the British oil company, announced this week it would reduce the value of its oil and gas assets by $17.5 billion. Even though this represents a large potential asset write down, an accounting change such as this one does not take even one cent out of the corporation’s considerable cash reserves. This is simply a change in accounting assumptions reflecting that global demand for energy products has declined significantly due to the current pandemic and the rate at which product demand returns to normal remains unclear. BP’s CEO, Bernard Looney, stated these measures would “better enable us to compete through the energy transition.” But as we said no cash outlays or write offs were involved. Nor did the corporation’s assets or liabilities change physically or financially. Mr Looney’s comment sounds like the carefully crafted words of a financial PR pro, cloaking financial necessity in a veil of green. […]

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