Climate Crusaders Are Wrong About Norway’s Oil Divestment Proposal

From The Daily Caller

11:47 AM 03/08/2019 | Energy

Michael Bastasch | Energy Editor

Environmentalists_Protest-e1552063389102

Climate crusaders celebrating Norway’s proposal to divest its sovereign wealth fund from oil and gas stocks should pause before popping the carbon-neutral champagne.

In fact, the proposed divestment is limited to only include companies solely involved in oil and gas exploration, not integrated majors like BP, Exxon and Equinor, Norway’s state-owned oil giant. Norway’s proposal would affect about $40 billion in holdings out of a $1 trillion fund.

Also, Norway’s government said Friday the decision was to “reduce the vulnerability of our common wealth to a permanent oil price decline,” and not environmental considerations. Basically, the country doesn’t want to hold too many oil and gas stocks should the price tank, like it did in 2014.

Environmental activists are spinning this as a victory in their war against fossil fuels. Activists said it shattered the “illusion” that fossil fuels would continue to be used for decades, despite global warming. (RELATED: Democrats, Including Ocasio-Cortez, Vote Against Green New Deal Amendment)

Bill McKibben founded 350.org, an anti-fossil fuel environmental group that pushes for divestment. The group claims more than 1,000 organizations, companies and nonprofits pledged to divest from fossil fuels, collectively worth more than $8 trillion.

350.org includes Norway’s sovereign wealth fund on its divestment list, but the country is not divesting from fossil fuels as McKibben claimed. McKibben and 350.org rose to prominence over their opposition to the Keystone XL oil pipeline.

Activists opposed to the Keystone XL tar sands pipeline project tie themselves to the White House fence during an environmental protest in Washington

Civil rights activist Julian Bond (top row, 3rd L), Sierra Club Executive Director Michael Brune (top row, 4th L) and activists opposed to the Keystone XL tar sands pipeline project tie themselves to the White House fence during an environmental protest in Washington, D.C., on Feb. 13, 2013. REUTERS/Jonathan Ernst

Norway is trying to insulate itself from price volatility — the country is heavily reliant on petroleum exports and oil revenues. Norway’s sovereign wealth fund is the largest in the world and funded through oil and gas revenues.

“The oil business will be a major and important industry in Norway for many years to come,” said Norwegian Finance Minister Siv Jensen, according to The Financial Times.

Jensen did, however, say Norway was looking to capitalize on expected growth in renewable energy. Paradoxically, Jensen suggested the growth in renewables, mainly wind and solar, would be driven by oil majors like BP.

“Everything indicates that almost the entire growth in listed infrastructure for renewable energy over the next 10 years will be driven by companies that do not have renewable energy as their main activity. It is a growth the fund should be able to take part in,” Jensen said.

Norwegian lawmakers will vote on the proposal to divest from oil and gas companies later this year.

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65 thoughts on “Climate Crusaders Are Wrong About Norway’s Oil Divestment Proposal

  1. Idiotic move on their part, if it does go through. Not sure what crystal ball they are looking at to see a “permanent price decline” in oil, but I suggest they get one not all cracked and clouded up with “carbon” delusions.

    • If you go to ecatworld.com you will see the actual threat to fossil fuels. It is not solar and wind. It is Rossie and Mills.

      • A top post on Rossi and the e-cat would be fun for an update on the latest antics of this crew.
        It could be a “Friday Funnys” post.
        It would be great to catch up on the latest over-the-top drama from this never ending soap opera.

        The e-cat is ready to go commercial, we will announce later this year!
        First quarter next year at the latest, for sure!
        Really, this time, really we are ready to go!
        Really, Really, this time for Sure!
        …………………………..
        An investor was a thief and tried to steal our world changing breakthrough away from us. We have to pull back while we regroup.

        Been going on like this for a decade now.
        Quite the circus.

    • They decided that for the time of a likely world recession (+possible US-China trade war) it’s safer not to have all eggs in one basket. When energy prices go up they will benefit anyway from their own huge reserves. Saudies and Gulf Emirates have done so many years ago.

    • Not idiotic at all. The source of funding is oil and gas revenues. Investing that money in oil and gas just doubles down on the risk. Elementary financial theory would suggest that their investments should not include securities whose return is highly correlated with the price of oil and gas.

    • It’s obvious to the discerning readers of WUWT that in the real world, this is a mental move that does nothing but offer up some bargain shares in evil big oil to anyone who knows how to make money; indeed the last time this divestment malarkey was tried on by the director of the Norwegian SWF, it had to be admitted that since the oil price was recovering, those dirty oil shares that are supposedly such a big risk were the best performing shares in the SWF portfolio for the quarter.
      However we are not talking about the real world, we are talking about the People’s Utopia of Norway.
      The ‘youth’ wings of all major parties favour the rapid phase out of all oil activities, so within a generation there is a real possibility of Norway committing economic suicide.
      Some idea of how daunting the ‘can’t fix stupid’ problem is in Norway can be gleaned from the summary of a recent study which aimed to find out why youth didn’t want to listen to the oil industry make piss-weak excuses for existing (https://norskoljeoggass.no/globalassets/dokumenter/den-nye-oljen—english-summary.pdf). Apparently the Norwegian education system which UN praises doesn’t bother teaching young Noggies how their welfare utopia was recently one of Europe’s poorest countries whose chief exports were tinned herring and desperate people, but has become one the wealthiest thanks entirely to the production and export of oil. They have been dogmatically convinced that gullible warming is happening before their very eyes (you know, because they can get by with winter tyres that don’t have studs these days and they got the barbeque out two whole times last summer, #whyisitsoHOT) and it’s all going to be fixed if the oil is left in the ground and ‘the rich’ pay more tax. Since they’ve grown up taking all that ‘free’ welfare that other people’s tax and hefty oil revenues have underpinned for granted, they’ve got the novel idea that they’ll always get what they believe they’re entitled to, no matter what. The state will always look after them.
      Moreover, the majority of young useful idiots in Norway actually believe they can bite the hand that feeds and keep the socialist gravy train rolling without oil because of that wealth they’ve been promised will soon be rolling in on the proceeds of storing unicorn fart energy to sell back to the EUssr in receivership when the wind isn’t blowing in Germany (https://www.politico.eu/article/norways-glaciers-could-fill-europes-energy-gap-green-battery-renewables/ , https://www.lifeinnorway.net/europes-green-battery/) or on the imaginary profits and job creation to be made on pumping their neighbour’s ‘dirty’ CO2 underground – just as long as society gets the sort of carbon tax to make the parasite industry artificially viable (https://www.nho.no/contentassets/e41282b08ceb49f18b63d0f4cc9c5270/industrial-opportunities-ccs_english.pdf).
      So with all these green jobs just around the corner, who needs oil anyway? I guess they weren’t paying attention to reports from Spain indicating that every green ‘job’ created killed about four real jobs.
      The phrase ‘shitting in your own nest’ has clearly not been translated til norsk.
      So with a brewing excreta storm on the horizon, maybe the SWF has seen the writing on the wall? Maybe pragmatic heads have accepted that since they’ll be paying all the welfare bills once the young useful idiots have run the oil industry out of town and committed to a future economy based on subsidy dependent green boondoggles, they’d better get out of oil now while they can still get a decent price on the divested shares?

  2. I would consider “renewables” dependent mostly on government policies requiring such, not on the actual benefits of or technical improvements in wind and solar. As governments can and do change policies, the Norwegian government is betting on the continuation of the current policy.

  3. Crude oil, adjusted for CPI has not changed much since 1986. DOE EIA WTI and Brent data back to 1986 shows CPI adjusted price in the $10 to $20/bbl range. Now it is at $20 to $25/bbl. So despite a more than doubling of demand, pricing has not changed all that much in 30 years.

    • You cherry picked 1986, the year the oil price hit bottom. Oil price has increased about 1.8 % beyond inflation since 1979, the year of the Iranian revolution. My source is the BP data base.

      • My first memory of the price of gold was that it was under $40/ounce. I remember one could purchase an ounce of palladium and platinum at Woolworths for about $20/ounce.

        I don’t recall the price of crude then, but gasoline was $0.20/gallon. The cheapest I recall was lower than that and I think sometimes on trips near the border my dad would cross into Canada because their gallons were bigger.

        I remember you could buy a chocolate malt shake (real milk and ice cream), cheese burger and fries at McDonalds for well under a dollar.

        Food seems to be up about 10X (although I would argue that quality is poorer now), gasoline is up about 10X (at the moment) and precious metals are up 30-90X.

        • As far as I can tell the last time gasoline was 20¢/gallon was 1940. 20¢ in 1940 is $3.62 in today’s money. I noticed the other day that most of the stations around me were selling regular right around $2 so gas is quite a bargain now compared to 1940.

          • Maybe my memory is wrong and maybe it was gasoline “wars” of the late 1960’s and confined to the Detroit area, but that is my recollection.

          • When I was 15 1/2, I drove a Mercedes 190D from California to Iowa with my father in 1967 with diesel fuel at $0.17/gal. In 1969 I got my first car and premium was $0.22/gal and during gas wars, was even lower.

            And no, I didn’t cherry pick the data. That is when the DOE EIA crude data base started, so I used what data was easily available.

          • I remember gasoline at 25 cents per gallon in California the mid to late 60s, when silver coin was still in circulation.

    • Actually Norway is doing well from renewable energy. It has always used a lot of hydro and now that its southern neighbours have been stupid enough to have large wind energy programmes they buy wind generated electricity when it is cheap and sell hydro generated electricity when the price is high. The are already making good money from the idiots in Denmark and there is an HV DC line planned to enable them to profit from German stupidity was well.

  4. I’m wondering if the climate and eco-activists realize and understand that divestment from the fossil fuels industry does not mean that those sold fossil fuels shares just disappear into thin air. It is entirely plausible that other investors will be there to scoop them up during a decline in the share price. Buy low and sell high as they say in the investment business.

    What matters here is what the share price is doing on the exchanges. Is it going up, down or remaining stable? Do the fossil fuel companies really care who it is exactly that owns shares in the company?

    The share price of fossil fuel companies is likely affected by many things, including whether the markets are bullish or bearish mode and the demand for fossil fuels vs. supply, which of course affects the price of fossil fuels themselves. I’m no expert in the investment field or the financial markets, but I still understand these things. I suspect that these activists do not, so Bill McKibben and his minions only make themselves look foolish if they believe they are making a difference here with their divestment campaign. Pure religion.

    • “McKibben and his minions only make themselves look foolish if they believe they are making a difference here with their divestment campaign. Pure religion”.

      …..A religion that embraces various fairy tales as its core dogma.

    • If you divest, that means you are selling your shares. That also means that somebody is buying them, otherwise you might as well put them in the shredder. The buyer will only purchase the shares if he is convinced they are worth the price. In effect, Norway is setting up a bargain bin when they make such an announcement. I like it. The most money I ever made was on oil company shares, specifically dirty oil company, Suncor Canada. Let me know when the divestment begins.

    • Three-quarters of 1% if my math is right. So minuscule it’s funny. The activists will say it’s still a victory as long as it more than zero.

      • I was hopeful for a second that someone in the Norwegian govt had a wicked sense of humour and it would pan out at 400 parts per million.
        never mind

  5. “In fact, the proposed divestment is limited to only include companies solely involved in oil and gas exploration, not integrated majors like BP, Exxon and Equinor, Norway’s state-owned oil giant.”</blockquote

    Oil and gas exploration plus exploratory drilling are high risk. All Norway is doing is reducing risk in oil ventures.

    “Huge huge huge win–Norwegian govt (an oil state) is recommending that the world’s largest sovereign wealth fund Fully Divest From All Fossil Fuel.”

    A) McKibben is lying.
    B) McKibben is counting his oil company successes before they actually happen.

    “Jensen did, however, say Norway was looking to capitalize on expected growth in renewable energy. Paradoxically, Jensen suggested the growth in renewables, mainly wind and solar, would be driven by oil majors like BP.”

    What Norway is doing is moving their high risk investments from oil/gas exploration to anticipated renewable energy expansions.

    An odd choice given that renewables have not demonstrated any of the claimed benefits and over-optimistic estimates of renewable energy’s productive life are just now coming to light.
    Norway betting on substantial renewable energy expansions may be higher risk than oil/gas explorations.

    “If it passes through Parliament this deal will”

    McKibben is counting his unicorns early this year.

    • It’s interesting to note that as the price of oil has dropped from earlier highs, oil production in the USA has increased to the point that the industry is producing greater amounts of oil than what is daily demanded in this country. This is because the latest improvements in the technology of both drilling and exploration, as well as oil recovery in wells seemingly thought exhausted, has lowered the unit costs of same. Especially here in Texas, where oil and gas production has increased significantly since 1986, when the oil patch was experiencing its major bust.

      So this is just another moment in the ongoing cycle of boom-and-bust invthe production of fossil fuels. Norway is fooling itself and losing a good opportunity by assuming that there will be a “permanent reduction in the price of oil,” even though there is always high risk in exploration.

  6. Norway government earns almost 30 billions $ us a year from royalties and participations in its oil properties, outside revenues from its sovereign fund. So when it starts choping in this source of revenue, I will tale them seriously when they talk ghg.

  7. More virtue signaling by the Greens and nothing more. The notion that a nation would divest itself of the wealth source that allows it to run a Socialist heavy government is absurd. All any “divestment” in fossil fuels does is redistribute the shareholders and my bet is the fossil fuel market will grow before it collapses.

  8. Here again is a reflection on the Synod of the Church of England’s decision madly to disinvest in fossil fuels unless companies conform to the Paris Agreement. How? May I be around to mop up the sold stock after they have virtue signalled away their pensioners .

  9. “reduce the vulnerability of our common wealth to a permanent oil price decline,”

    The only economic reason for world oil to “permanently decline” is if world oil production continues to go up, as demand is also steadily growing. OPEC learned a very painful lesson after their 2014 attempt to kill the US fracking boom. The price crash only made the US frackers leaner, tougher, and more efficient.
    SO it sounds like Norway is resigned to a steady supply of oil on the world markets for decades to come. That is sweet news to my Chevy pickup truck driving life-style. And if the Greens had any brains (they don’t), they’d realize it means there will be no let up in global fossil fuel consumption.

    As far as divestment itself goes, Norway is simply making a portfolio adjustment based on a fiduciary responsibility to maximize returns by protecting the fund from assets that might experience a long-term decline in price. Norway is not divesting for virtue signaling. Another example that shows the Green idiots cannot understand basic economic maths like ROIs.

  10. “Huge huge huge win–Norwegian govt (an oil state)…”
    So an oil-dependent state wants to invest in not-oil. Diversification is a sensible strategy for anyone with money to invest.

    • Diversification for diversification’s sake is not a sensible strategy. Otherwise, diversifying into unicorn farts would be a sensible thing to do.

  11. Isn’t divesting just selling shares to someone else? So for each divestment someone else is making an investment. The result equals zero net change.

  12. Perhaps they view that what is happening in Venezuela is in their future if they do not diversify, yet continue to grow in population and social programs. You need not spend other people’s money if you have other sources of income.

    • Venezuela is dying because Chavez was a Marxist, Maduro is a slightly retarded communist loyal to the Castro regime, and on top of their socialism they are also corrupt and supremely inept.

      • This. If Venezuela was run by the Norwegian government it would be a different story there.

      • Corrupt they may be, but inept they certainly are not . The Chavez family walked away with billions (or so we are led to believe by some reports ) and Maduro is likely to repeat their successful heist.

        • Depends on what one is looking for in terms of “eptness”. While they certainly were successful at enriching themselves, the weren’t in any way successful at running a country. So inept stewards of the country regardless of (or rather because of) success at self-enrichment.

      • Chavez was a Marxist, Maduro is a slightly retarded communist

        on top of their socialism they are also corrupt and supremely inept.

        The second quoted sentence is simply redundant to the first quoted sentence.

  13. Crusaders confronted and repelled an invasion. Social Justice Adventurers force science to the back of the bus.

  14. subprime mortgages are in no way “correlated with the price of oil and gas”.

    and as reliable as “climate models”.

    next recommendations please.

  15. Divestment means you sell it to someone else, right? So you may really be concentrating control of oil and gas to just a few very wealthy people. That does not seem very smart.

    • “So you may really be concentrating control of oil and gas to just a few very wealthy people.” Not really. there will be a few very wealthy buyers but majority of stock will be bought by mutual funds.

  16. Now we all know that the Greens are against Hydro. Despite it being 100 % green, none of that dreadful stuff CO2, its caused by humans when they built Dams, so no way is it a renewable.

    MJE

  17. Divestment for risk management is a legitimate strategy. The risk here is that the U.S. is producing lots of oil and there is significant risk to owning shares if the price of oil continues to decline.

    If you are divesting for environmental reasons, it is pure stupidity. Divesting does nothing to change CO2 output, it just changes the ownership. And if share prices rise, somebody else gets the benefit. Divestment is pure virtue signalling.

    • There is surely a degree of Virtue Signalling going, but it also makes economical sense.
      The norwegian economy is close to 100% oil-dependent. Divesting our savings away form oil will make us less susceptible to changes in the oil price.

  18. If you think about, it seems to indicate that Norway is betting that the increased production from the US and other countries, along with increased exploration is going to drive down the value of oil and nat.gas. This jibes with the Russian drive to increase sales volume to make up for the lower prices since 2014. Oil prices may have already peaked for the foreseeable future.

  19. North sea oil production for the UK is down about 9% since the well was opened in the 1970’s. Does Norway draw from the same well? If so, then production will also be down.

    Their whole economy and welfare state is oil funded.

  20. This is just Norway doing the “holier-than-thou”, “do-as-I-say-not-as-I-do” thing again. It might be dressed up in economic language, but it is pure politics from a government trying to keep its coalition together. My (Norwegian) wife is embarrassed every time they do this kind of thing – as though a pretty small country with an vast resource base (not just oil and gas, but other minerals and the geography to produce enormous amounts of hydro-power) can tell the rest of the world how to live.

    Even worse, the Prime Minister’s announcement was pre-empted by the leader of the most left-leaning coalition partner, who conveniently failed to point out that the divestment was limited to pure exploration and production companies – causing the whole sector to suffer a serious drop in share price. This is the kind of stock market manipulation that gets people investigated by the SEC, but I doubt anyone will say a peep in this case.

  21. (RELATED: Democrats, Including Ocasio-Cortez, Vote Against Green New Deal Amendment)

    Good on Wisconsin Republican Rep. Sean Duffy. Shame the Lamestream Media didn’t report on that.

  22. A suggestion would be to invest in the Mazda Motor Corporation, as they have pledged to go the path alone. They’re the only Japanese auto maker to make a public statement about its commitment to further the efficiency and advancements of the gasoline powered internal combustion engine. The rest of the japanese automakers in step with the American’s GM & Ford have all pretty much declared an all EV future. Pegging an end of production for all petrol powered vehicles somewhere in the area of 2025-2030.

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