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A Lump of Coal for Fossil Fuels
Plunging oil, gas, and coal stocks make it a fine time to divest.
Dec 17, 2014
The fossil-fuel divestment movement got the perfect holiday gift in 2014: tumbling stocks.
Founded only two years ago by experts and students fed up with the glacial pace of climate action, this global effort is already liquidating more than $50 billion of the oil, gas, and coal assets owned both by individuals and institutions like colleges and dioceses.
What's moving that mound of money? For the most part, divestors heeded moral questions of the "how will your grandchildren survive once the seas swallow Florida" variety. But they're also wagering that fossil fuel investments aren't the sure bets they used to be.
Eventually, as the movement's "unburnable carbon" logic goes, governments -- even our own -- will realize that they can't afford a climate crisis.
Authorities will then force companies in dirty-energy businesses to keep their oil, gas, and coal underground by some combination of steep taxes and strict regulations. Once the world stops burning climate-changing carbon, dirty-energy stocks and bonds will become worthless.
In other words, move your money before it's too late.
I strongly support this effort and devoted some time to helping word a personal divestment pledge a few months ago. I also became one of the first 700 individuals who have promised to rid our personally held investments of oil, gas, and coal exposure within five years and channel that money into better things, like solar power and organic food.
The movement's naysayers claim that investors will suffer without exposure to fossil fuel assets. Really?
Investing your life savings in coal these days is as effective as flinging gold coins down a mine shaft. Thanks to crumbling demand and weak prices, the industry's stocks, as measured by the Market Vectors Coal exchange-traded fund (KOL), have plummeted by 60 percent over the past five years. The Dow Jones Industrial Average gained 63 percent over that period.
Lackluster forecasts suggest that anyone investing in coal will lose even more money next year.
What about swearing off oil and gas stocks? Mainstream advice counsels owning some because of the industry's historically good performance and big dividends.
Not in 2014. Investors who bet on oil and gas lost big.
Oil prices have slunk below $60 a barrel for the first time in more than five years, dragging stock and bond values along with them. OPEC's Thanksgiving Day announcement that it wouldn't cut production to shore up oil prices sent them hurtling downward.
The decision gave Black Friday a new meaning for the dirty-energy business.
As of mid-December, shares in the broad oil and gas industries had tumbled about 15 percent for the year, as measured by the Energy Select exchange-traded fund (XLE). The Dow, in contrast, inched up 3 percent. Over the past five years, oil and gas stocks have made some gains, yet severely under-performed the rest of the stock market.
What about shares in companies mostly engaged in fracking? They've fared way worse, sinking more than 20 percent over the past five years.
With OPEC predicting that low demand may sweep oil prices to 11-year lows -- somewhere in the $40-per-barrel neighborhood -- don't hold your breath waiting these stocks to rebound.
Divestment foes also claim that the movement probably won't directly hurt asset prices for fossil fuels. That's beside the point now. The oil, gas, and coal industries are pulling the rug out from under their own assets by drilling and mining more than the market can bear.
The fact is, anyone who stopped investing in the fossil fuel industries had an inherent financial advantage in 2014 over people and institutions that failed to take that step. There's never been a better time for investors to scrub the dirty energy out of their portfolios.
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Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
This column was distributed by OtherWords.
Emily Schwartz Greco
Emily Schwartz Greco is the Philanthropy + Nonprofits Editor for The Conversation. Previously, Emily was the managing editor of the OtherWords editorial service. She covered Latin America for the Bloomberg and Dow Jones news services.
The fossil-fuel divestment movement got the perfect holiday gift in 2014: tumbling stocks.
Founded only two years ago by experts and students fed up with the glacial pace of climate action, this global effort is already liquidating more than $50 billion of the oil, gas, and coal assets owned both by individuals and institutions like colleges and dioceses.
What's moving that mound of money? For the most part, divestors heeded moral questions of the "how will your grandchildren survive once the seas swallow Florida" variety. But they're also wagering that fossil fuel investments aren't the sure bets they used to be.
Eventually, as the movement's "unburnable carbon" logic goes, governments -- even our own -- will realize that they can't afford a climate crisis.
Authorities will then force companies in dirty-energy businesses to keep their oil, gas, and coal underground by some combination of steep taxes and strict regulations. Once the world stops burning climate-changing carbon, dirty-energy stocks and bonds will become worthless.
In other words, move your money before it's too late.
I strongly support this effort and devoted some time to helping word a personal divestment pledge a few months ago. I also became one of the first 700 individuals who have promised to rid our personally held investments of oil, gas, and coal exposure within five years and channel that money into better things, like solar power and organic food.
The movement's naysayers claim that investors will suffer without exposure to fossil fuel assets. Really?
Investing your life savings in coal these days is as effective as flinging gold coins down a mine shaft. Thanks to crumbling demand and weak prices, the industry's stocks, as measured by the Market Vectors Coal exchange-traded fund (KOL), have plummeted by 60 percent over the past five years. The Dow Jones Industrial Average gained 63 percent over that period.
Lackluster forecasts suggest that anyone investing in coal will lose even more money next year.
What about swearing off oil and gas stocks? Mainstream advice counsels owning some because of the industry's historically good performance and big dividends.
Not in 2014. Investors who bet on oil and gas lost big.
Oil prices have slunk below $60 a barrel for the first time in more than five years, dragging stock and bond values along with them. OPEC's Thanksgiving Day announcement that it wouldn't cut production to shore up oil prices sent them hurtling downward.
The decision gave Black Friday a new meaning for the dirty-energy business.
As of mid-December, shares in the broad oil and gas industries had tumbled about 15 percent for the year, as measured by the Energy Select exchange-traded fund (XLE). The Dow, in contrast, inched up 3 percent. Over the past five years, oil and gas stocks have made some gains, yet severely under-performed the rest of the stock market.
What about shares in companies mostly engaged in fracking? They've fared way worse, sinking more than 20 percent over the past five years.
With OPEC predicting that low demand may sweep oil prices to 11-year lows -- somewhere in the $40-per-barrel neighborhood -- don't hold your breath waiting these stocks to rebound.
Divestment foes also claim that the movement probably won't directly hurt asset prices for fossil fuels. That's beside the point now. The oil, gas, and coal industries are pulling the rug out from under their own assets by drilling and mining more than the market can bear.
The fact is, anyone who stopped investing in the fossil fuel industries had an inherent financial advantage in 2014 over people and institutions that failed to take that step. There's never been a better time for investors to scrub the dirty energy out of their portfolios.
Emily Schwartz Greco
Emily Schwartz Greco is the Philanthropy + Nonprofits Editor for The Conversation. Previously, Emily was the managing editor of the OtherWords editorial service. She covered Latin America for the Bloomberg and Dow Jones news services.
The fossil-fuel divestment movement got the perfect holiday gift in 2014: tumbling stocks.
Founded only two years ago by experts and students fed up with the glacial pace of climate action, this global effort is already liquidating more than $50 billion of the oil, gas, and coal assets owned both by individuals and institutions like colleges and dioceses.
What's moving that mound of money? For the most part, divestors heeded moral questions of the "how will your grandchildren survive once the seas swallow Florida" variety. But they're also wagering that fossil fuel investments aren't the sure bets they used to be.
Eventually, as the movement's "unburnable carbon" logic goes, governments -- even our own -- will realize that they can't afford a climate crisis.
Authorities will then force companies in dirty-energy businesses to keep their oil, gas, and coal underground by some combination of steep taxes and strict regulations. Once the world stops burning climate-changing carbon, dirty-energy stocks and bonds will become worthless.
In other words, move your money before it's too late.
I strongly support this effort and devoted some time to helping word a personal divestment pledge a few months ago. I also became one of the first 700 individuals who have promised to rid our personally held investments of oil, gas, and coal exposure within five years and channel that money into better things, like solar power and organic food.
The movement's naysayers claim that investors will suffer without exposure to fossil fuel assets. Really?
Investing your life savings in coal these days is as effective as flinging gold coins down a mine shaft. Thanks to crumbling demand and weak prices, the industry's stocks, as measured by the Market Vectors Coal exchange-traded fund (KOL), have plummeted by 60 percent over the past five years. The Dow Jones Industrial Average gained 63 percent over that period.
Lackluster forecasts suggest that anyone investing in coal will lose even more money next year.
What about swearing off oil and gas stocks? Mainstream advice counsels owning some because of the industry's historically good performance and big dividends.
Not in 2014. Investors who bet on oil and gas lost big.
Oil prices have slunk below $60 a barrel for the first time in more than five years, dragging stock and bond values along with them. OPEC's Thanksgiving Day announcement that it wouldn't cut production to shore up oil prices sent them hurtling downward.
The decision gave Black Friday a new meaning for the dirty-energy business.
As of mid-December, shares in the broad oil and gas industries had tumbled about 15 percent for the year, as measured by the Energy Select exchange-traded fund (XLE). The Dow, in contrast, inched up 3 percent. Over the past five years, oil and gas stocks have made some gains, yet severely under-performed the rest of the stock market.
What about shares in companies mostly engaged in fracking? They've fared way worse, sinking more than 20 percent over the past five years.
With OPEC predicting that low demand may sweep oil prices to 11-year lows -- somewhere in the $40-per-barrel neighborhood -- don't hold your breath waiting these stocks to rebound.
Divestment foes also claim that the movement probably won't directly hurt asset prices for fossil fuels. That's beside the point now. The oil, gas, and coal industries are pulling the rug out from under their own assets by drilling and mining more than the market can bear.
The fact is, anyone who stopped investing in the fossil fuel industries had an inherent financial advantage in 2014 over people and institutions that failed to take that step. There's never been a better time for investors to scrub the dirty energy out of their portfolios.
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