Several weeks ago, the City of New York sued five big oil companies, including ExxonMobil, BP, and Shell, for damages related to Hurricane Sandy in 2012.
According to Mayor Bill de Blasio, greenhouse gas emissions from the production and consumption of fossil fuels precipitated a change in global climate that caused the storm to hit the city.
Eight California cities and counties, including Richmond, which is home to a large Chevron refinery, have also filed lawsuits against a range of oil, gas, and coal companies seeking billions of dollars to help pay for past and future damages linked to climate change.
Not to be outdone, on January 25 the city of Boulder, Colorado joined the fray by taking legal action to force fossil fuel companies to cover the costs of damages caused by severe past and future weather events.
Coupled with legal actions against energy companies, the divestment crusade continues apace. New York City is liquidating $5 billion of pension funds currently invested in oil and gas companies.
San Francisco, Berkeley, Madison, Wisc., and a number of other cities have also pledged to reduce their pension funds’ holdings of fossil fuel companies.
Several years ago, the Rockefeller Brothers Fund announced it would sell all of its fossil fuel company stocks (Is John D. turning in his grave?)
Banks, insurance companies, foundations, faith-based institutions, and universities are also being pressured to get rid of their oil, gas, and coal company investments.
The third leg of the “keep it in the ground” movement is opposition to energy infrastructure projects like pipelines, gas liquefaction projects, and export facilities.
Though the fights against the Keystone and Dakota Access pipelines have gained the most media attention, battles are being waged over dozens of other proposed infrastructure projects, especially in the Northeast and on the West Coast.
Governor Andrew Cuomo’s veto of the Constitution Pipeline that could bring cheap natural gas to New York consumers is a prime local example.
Regrettably, the anti-fossil fuel movement suffers from both financial and political naiveté. The costs to local governments of pursuing legal actions of dubious merit against oil and gas companies will mean higher taxes or less revenue available for schools and other municipal services.
Fossil fuel asset prices are unlikely to be affected by divestment, while numerous studies have shown that the pursuit of divestment strategies reduces returns to beneficiaries by decreasing portfolio diversification.
What’s more, by potentially removing a large and profitable sector of the U.S. and global economies from their portfolios, financial managers may be disregarding their implicit fiduciary responsibilities.
Opponents of fossil fuels also fail to acknowledge how the oil and gas industry contributes to America’s economic prosperity. The American Petroleum Institute calculates that more than 11 million jobs nationwide are supported by oil and gas production.
At the same time, all U.S. households and businesses benefit from relatively inexpensive and reliable energy supplies that help keep down the costs of heating and cooling, while powering a growing fleet of electronics and appliances in the typical home.
Cheap energy also holds down manufacturing costs while enhancing the competitiveness of American goods in the global marketplace.
Finally, the “keep it in the ground” movement could use a dose of economic reality. Like it or not, according to the most recent forecast by the U.S. Energy Information Administration (EIA), despite the growing use of renewables oil and gas will still account for the lion’s share of global energy supply in the year 2040.
This offers tremendous opportunities to further enhance America’s energy dominance, with all the attendant economic and security benefits, by expanding oil and gas exports even as domestic consumption moderates.
But the key to realizing this potential lies with building out the requisite infrastructure of pipelines, liquefied natural gas facilities, and export terminals — a task that has become more difficult and expensive as a result of the growing pushback by anti-carbon activists who are now focused on “shaming” financial institutions, foundations, pension funds, and endowments who hold assets or extend credit to fossil fuel companies.
Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics in the Cox School of Business at Southern Methodist University.
Read more at IBD
Hypocritical climate jihadists. Put up or shut up. Show the world you mean what you say and stop buying gasoline and diesel, don’t fly anywhere for any reason as that consumes jet fuel, shut off the valve to your natural gas home furnace and hot water heater, don’t buy or use anything plastic – including your cell phone and computer and marking pens for your plastic protest signs.
Lets see these idiots go and live in a grass hut without any heat and no windows to keep out the cold winds and no fores to cook their food no electric blankets no hot water no anything at all to keep their little toes from freezing and nothing at all living like hermits