Owning the fossil fuel companies by boosting fossil fuel profits

That’ll larn ‘em, eh? Pass a law which increases the profits of the fossil fuel companies in order to punish the fossil fuel companies for causing climate change. Well done there, vry well done those men.

Spain will become the first country in the world to ban petrol advertisements under a law soon to be passed by its Left-wing government.

Petrol or diesel adverts will not be allowed unless the product contains some non-fossil ingredient such as biofuel, according to a draft bill announced on Tuesday by consumer affairs minister, Pablo Bustinduy.

One possible effect here is absolutely nothing. As all such fossil fuels are now mixed with ethanol much of which is - grossly stupidly of course - derived from plants. So the only effect could be the ability to preen by politicians.

The other possible effect is to increase the profits of the fossil fuel companies. No one does go out and buy a car because they see an ad for Galp brand petrol. But they might buy Galp brand petrol in preference to Repsol if the advertising for Galp petrol works.

Which is how most advertising does work of course. It isn’t about converting people to the use of the base product at all, it’s about switching people from one brand to another of that same base product. We don’t have showers because we see ads for a shampoo brand but we might switch brands of shampoo as a result of having seen a shampoo ad.

The result of this is that advertising of brands is an arms race. Yes, there’s the attempt to get consumers to switch brands - but there’s also that reaction to everyone else’s advertising trying to stop them switching away from the brand of this specific advertiser. Much such advertising is in fact a zero sum game.

So, ban advertising of fossil fuels and no fossil fuel provider has to pay to advertise. Fossil fuel consumption remains where it is but costs to fossil fuel companies are lower - their profits rise. Which is really going to stick it to those fossil fuel companies, reducing their costs and raising their profits in order to punish them for climate change.

None of this is unknown, or even thought marginal, in the economics of advertising. But then socialist governments never have been known to be all that up to date with economics, have they?

Tim Worstall