Guest NOT! by David Middleton
At last, divestment is hitting the fossil fuel industry where it hurts
Trillions of dollars of investments are being taken out of carbon-intensive companies. Governments must now take notice
Bill McKibben
Sun 16 Dec 2018
I remember well the first institution to announce it was divesting from fossil fuel. It was 2012 and I was on the second week of a gruelling tour across the US trying to spark a movement. Our roadshow had been playing to packed houses down the west coast, and we’d crossed the continent to Portland, Maine. As a raucous crowd jammed the biggest theatre in town, a physicist named Stephen Mulkey took the mic. He was at the time president of the tiny Unity College in the state’s rural interior, and he announced that over the weekend its trustees had voted to sell their shares in coal, oil and gas companies. “The time is long overdue for all investors to take a hard look at the consequences of supporting an industry that persists in destructive practices,” he said.
Six years later, we have marked the 1,000th divestment in what has become by far the largest anti-corporate campaign of its kind. The latest to sell their shares – major French and Australian pension funds, and Brandeis University in Massachusetts – bring the total size of portfolios and endowments in the campaign to just under $8 trillion (£6.4tn).
[…]
Note to Mr. Bill: Institutions with $8 trillion under management selling their investments in the “fossil fuel industry” does not constitute $8 trillion “being taken out of carbon-intensive companies.” These “investors” could only sell their investments if there were buyers willing to purchase them.
Let’s just look at one part of the “climate wrecking industry”…
Robust Near-Term Outlook for Oil & Gas US Integrated Industry
Zacks Equity Research November 26, 2018
The Zacks Oil and Gas U.S. Integrated industry comprises stocks having exposure to upstream, midstream and downstream energy businesses mostly in the domestic market.
Upstream activities involve exploration and production of oil and natural gas, while transportation of extracted commodities from wellhead to storage and processing terminals constitutes midstream operations. Through downstream businesses, the integrated energy firms refine raw crude before distributing the end products like gasoline to retail petrol pumps.
With exposure to every facet of energy operations, the integrated firms are relatively immune to volatility in oil and gas prices and hence could reward investors with stable cash flows.
[…]
Industry Outperforms S&P 500 & Sector
The Zacks Oil and Gas U.S. Integrated industry has outperformed the broader Zacks Oil – Energy Sector as well as the Zacks S&P 500 composite over the past year.
[…]
Oil & Gas-US Integrated has taken a beating lately along with the rest of the market; but it has outperformed both the S&P 500 and Oil-Energy (which includes solar) over the past year… despite a steep drop in oil prices.
There is no lack of investment capital for the fossil fuel industry because… REALITY EXISTS.
As long as there is a demand for fossil fuels, there will be investors.
So BIll… maybe you should stick to writing about things that fall within your area of competency.
Good lord, what an idiot. Anyone with a modicum of knowledge regarding the stock market would understand that selling a stock is a zero sum activity. For someone to sell, there has to be someone to buy. That doesn’t hurt the company. If someone dumps a very large quantity of stock at once it may drive the share price down temporarily, which would hurt the seller more than the company.
PS. I do wish that Bill would explain how his food gets delivered to the store without the use of fossil fuels.
Oh no it doesn’t!
It’s a cultural construct!
🙂
“I reject your reality and substitute my own”
Adam Savage
Actually it may be a brilliant plan. The sort of operation that needs a large investor.
Divestiture drops the stock price short term. A large investor with advance information could make billions.
We’ve seen these sort of destabilization ploys before on currency trading where some have made billions.
Each owner of the stock could dump the stock certificate down the toilet and it would have no effect on the company. The company only issues more stock after the price keeps rising. In a down market the company borrows to finance operations. The more the company is profitable, the less the stock price’s effect on long term capital investment decisions. Companies are not going to refuse to make money. Their objective is to be as large and as profitable as they can. As Harrison McCain of McCain Foods (annual sales of $8.5 billion) once said “A company can never be big enough”
The Humour is the Guardian did another piece earlier in the year on the increase in Fossil Fuel investment
https://www.theguardian.com/environment/2018/mar/28/extreme-fossil-fuel-investments-have-surged-under-donald-trump-report-reveals
So perhaps the guardian needs to get there reporters in the same room and sort out which it is 🙂
It’s both, as all those institution that McKibbles gets to sell, there are other institutions out there buying up those shares You can’t sell without someone else buying.
One might as well sell their house to bring down the high price of real estate.
So long as there is no practical alternative to oil and gas, divestiture will have the same effect as sea level rise on real estate prices.
It creates bargains for the unscrupulous to take advantage of the unsuspecting.
The biggest risk to the petroleum industry is the switch from gasoline to electric cars. And it won’t be to reduce carbon but because they are better.
They’re great for short commutes, but they aren’t better if you are travelling long distances. So bottom line is if you are a city dweller, you probably think they’re swell but if you are an rural driver, not so much.
Even if they were better, they don’t pose a risk to the oil & gas industry on any meaningful time scale.
They are OK for short commutes, providing you have a place to charge them.
and the money to afford a second car for the rest of your needs.
And if you don’t live in a really cold climate (Like Canada?) where you have to use battery power to warm the interior, defrost the windshield, and overcome the viscous lubricants.
Depends on the rest of your needs. If you live and commute in the city (or even the nearest of suburbs), rarely venturing out of that urban environment, your needs don’t require a second car as you can rent one much more cheaply for those rare long distance trips. If you live in the rural areas of the country, where you need to drive long distances on a regular basis, than an EV is not of much use, period.
That said, many city dwellers won’t have easy access to a charge. (if you live in an apartment and have to park in the street, where do you charge?) so EVs are really only good for a very small niche of the market – those with short commutes and easy access to a place to charge. Not so great for everyone else.
Currently, Audi is introducing its first all-electric model – the e-tron – which will be able to charge from 0 to 80% in around 30 minutes. That’s at 150 kW …
[ … ]
The third model – Audi e-tron GT – built on a second BEV platform and equipped with tech from Porsche, will be capable of charging at 350 kW. 80% state of charge should be achievable in 12-minutes.
https://insideevs.com/audi-electric-cars-charge-80-in-12-minutes/
The site, which will open next year, will serve as a waypoint between Los Angeles and Las Vegas, enabling electric cars with ranges of 200 miles or more to comfortably make the 270-mile trip without skimping on climate control or lowering cruising speeds. [ … ] Under 350-kW fast charging, a vehicle with a maximum range of about 310 miles would be able to gain 80 percent, or nearly 250 miles, in less than 20 minutes.
https://www.caranddriver.com/news/a15343724/first-u-s-350-kw-charging-station-will-allow-speedy-l-a-vegas-ev-road-trips/
Clearly it’s still a chicken or the egg situation but the car manufacturers are building chickens while the electricity suppliers are installing eggs.
In the Midwest US, Teslas are rare enough that we say, “Look!
A Tesla.” In Seattle they’re as common as BMWs.
And the “risk” to the oil & gas industry is nonexistent.
David
Schlumberger (SLB) soared up to 130 in May 2014.
So getting out was good timing, it was V. overbought.
Now at the 38 level it is equally oversold. On our work we call it a Downside Capitulation.
The line with today’s report that just went out.
“No matter how its pronounced,Schlumberger is a tradable buy”
🙂
Big Blue is easier to pronounce.. 😎
And for every buyer there is a seller.
If they were really “better” they wouldn’t need to be subsidized.
These “investors” could only sell their investments if there were buyers willing to purchase them.
I think that is my favorite retort in the article.
Even Soros was biding on the Coal mines going bankrupt a few years ago.
Obviously he knew what would happen.
Of course he did, his foundations were backing politicians and pushing for policies that would kill coal.
A jackass and his credibility are soon parted.
But, ut, but divestment worked in South Africa. Or did it?
I have recently had an exchange with the Bishop of Salisbury who leads for the Synod of the Church of England on the environment because of their policy to disinvest in fossil fuels, enclosing a photo I took of a Hmong trobal boy cooking the family lunch in the hut on twigs and dung. He was not moved- the fellow believes that the recent IPCC paper ha huge influence around the world. The idiot
Hmm…I’m not economist (just ask my wife who handles our books), but it seems to me that since the demand for fossil fuels has not really diminished then “dumping” fossil fuel investments on the market just gives others a chance at picking up a bargain.
(I wonder how many of those bargains Al Gore picked up?)
Say what you want about Bill McKibbon, it doesn’t matter.
On the AGW climate change issue he is a very respected authority, his review of Jonathan Franzen’s book “The End Of The End Of The Earth” is in this week’s New York Times Book Review.
Do these people have a clue? Apparently not…last time I checked science had a rigour, an adherence to methodology that required a theory to be falsifiable, in other words a quality to be proven right or wrong.
Well, as we all know…by definition AGW climate change fails…period. A theory, to be scientific must be falsifiable…so what?…It turns out it’s the message, not the science…less people as a goal?…I’m guessing,
only time will tell.
On the AGW climate change issue he is a very respected authority
only by his fellow Kool-Aid drinkers. the skeptic community has no respect for him or his authority, and the great unwashed masses don’t know who he is and don’t give a fig in either direction about him or what he has to say.
Companies sell stock to raise capital. Once it is sold, it is no longer theirs. Except for treasury stock, whatever happens to publicly traded stock has nothing to do with the company. Nothing. Whether their stock is 10 or a hundred, it has nothing to do with the company.
There are reasons why companies want their stock to do well. But if someone, or some institution, dumps their stock, it has NO AFFECT ON THE COMPANY. How third parties trade their stock is of no interest to them.
‘He was at the time president of the tiny Unity College in the state’s rural interior, and he announced that over the weekend its trustees had voted to sell their shares in coal, oil and gas companies. “The time is long overdue for all investors to take a hard look at the consequences of supporting an industry that persists in destructive practices,” he said.’
Sold. Didn’t burn them; sold them. Which accomplished what?
‘Six years later, we have marked the 1,000th divestment in what has become by far the largest anti-corporate campaign of its kind. The latest to sell their shares – major French and Australian pension funds, and Brandeis University in Massachusetts – bring the total size of portfolios and endowments in the campaign to just under $8 trillion (£6.4tn).’
The stock still exists. In someone else’s hands. So fvcking what? What have you accomplished?
You’re making way too much sense.
As someone else pointed out, the funds were worth $8Trillion, they didn’t sell $8T in fossil fuel industry stocks. And as Gamecock and others have pointed out, selling the stocks doesn’t hurt the companies, it only hurts those who are selling for political, rather than economic reasons.
ExxonMobil’s largest shareholder, the Vanguard Group, holds 7.7% of XOM. The Vanguard Group has over $5 trillion under management. Their XOM position is currently worth about $27 billion.
McKibben boasted about 1,000 entities with $8 trillion under management divesting fossil fuels… an average of $8 billion per entity.
if someone, or some institution, dumps their stock, it has NO AFFECT ON THE COMPANY.
exactly. At most it creates a minor blip in the sale price of the stock. There are plenty of other buys who will gladly snap up the stock cheaply when the institution foolishly dumps their stock for non-economic reasons, but the price will quickly bounce back because it’s price is ultimately determined by the value of the company *NOT* the other way around.
The stock still exists. In someone else’s hands. So fvcking what? What have you accomplished?
again, you have it exactly right. In order for those institutions to sell the stock that means there are others that are buying it. And the company doesn’t care either way as they already got their money when they initially offered the stock in the first place.
I would imagine that most of the companies are glad that those shares of stock are now in the hands of rational investors. IE, ones that will be introducing trash resolutions at each share holder meeting, and who will be voting their shares in what they consider to be, the best interests of the company, as opposed to using those votes to make political statements.
Indeed. well stated Mark
I cut Bill some slack. He’s just doing his job. Imagine having to sit around all day thinking up the stuff he does so he can get paid. I couldn’t do it.
The paymasters are going to find someone to do the job he does. If it weren’t Weepy Bill, it would be someone else. Bill seems to be doing OK – has a bit of a knack for doom mongering – so they keep him on.
Now, it’s close, but I think he’ll come sliding into home plate and a comfy retirement before the wheels come off the Climate Change gravy train. That’s his hope, I’m pretty sure. I don’t really care, though.
So… I don’t weep for Weepy Bill. I do weep for those he has misled.
Having re-read the comments, I don’t see anyone weeping for Weepy Bill. He seems to engender other emotions in people.
Hmmm… I just reviewed my comment and I must confess that it is somewhat less than a full on pitbull defense of Weepy Bill. But it’s the best I could do given what I had to work with.
If people really think that fossil fuels are bad then they should stop making use of all goods and services that make use of fossil fuels. After all it is their money that is keeping the fossil fuel companies in business. But they are not doing that. For example I am sure that thy are eating food, wearing clothes, and using other products that were transported by the use of fossil fuels. If you think that the use of fossil fuels is bad and you are connected to a power grid that includes fossil fuel based energy sources then you should turn off the main breaker to your home and leave it off.
Mckibben stamped his stupidity into his url. 350.org. Time to move the goalposts Bill. 450.org?
Blubbering Bill lives in a fantasy world .
I know its sad but humans and cow farts are not driving the climate .
Never have never will .
Eco anarchists never seem to go fossil free but blab on about what others should do .
The only thing Exxon knew is they continue to sell products that have done more to
improve the quality of life than any climate charlatans .
What people like McKibben and his ilk fail to realise is that the fossil fuel industry as an industry puts out less CO2 into the atmosphere than many other industries. They merely produce their products as required by other industries and domestic users that burn the stuff to satisfy the various needs enjoyed by us all. Presumably he drives a car, is a consumer of manufactured goods, and travels by air for his lecturing against the fossil fuel industry. How does he feel he can operate in this world if he succeeds in his stupid aim of killing the hand that feeds him? Perhaps he should give a lecture on how the modern world can operate without oil, coal and gas for when his silly dreams come to pass.
In Australia, a number of virtue seeking companies sold there coal mines. A Chinese controlled company got them cheap. Australian investors weren’t interested. So the company is selling share in Hong Kong now.
The coal price is up. The share price is up. Dividends are up. Virtue seeking Australians miss out.
I’ve often wondered who is paying McKibbon. Someone is investing a lot of money in his projects.
I’ve often wondered who is paying McKibbon. Someone is investing a lot of money in his projects.
I wouldn’t be surprised if the name Soros isn’t in there somewhere.
Unintended consequences : Reality exists – and doesn’t go away with the wink of a Moskito Bat.
https://goo.gl/images/M8gEwp