Close the coalhouse door

Stanford divests from coal.

The US campus movement for university divestment from fossil fuels has claimed its first big scalp. From Climate Progress:

Stanford University announced Tuesday it would divest from the coal industry, making it the first major university to do so. ..
“Stanford has a responsibility as a global citizen to promote sustainability for our planet, and we work intensively to do so through our research, our educational programs and our campus operations,” said Stanford President John Hennessy. “Moving away from coal in the investment context is a small, but constructive, step while work continues, at Stanford and elsewhere, to develop broadly viable sustainable energy solutions for the future.”

Stanford is keeping oil and gas shares in its $18.7bn endowment, but the policy is under review. Deborah DeCotis, the chairwoman of the Stanford board’s special committee on investment responsibility:

Don’t interpret this as a pass on other things.

I reckon the oil and gas portfolio is now untenable and will be sold in the next 18 months.

The divestment movement launched by 350.org is well-aimed. The endowments of American universities (over $400 billion in all) come from gifts they received as noble and altruistic causes. They can’t with a straight face apply the investment standards of Gordon Gekko. Once they allow an ethical wedge, it is bound to split away climate-destroying investments.

Second, these endowments are very large, and divestment will make waves. More than lowering share prices by the selloff, it will lead other investors, including amoral ones, to treat fossil fuel companies as less reputable, riskier and more vulnerable to adverse policy shocks. Their cost of capital will rise, reducing their capex and eventually production. “Stranded asset” has entered the Wall Street vocabulary.

The Seven Sisters are already in decline as oil producers. They are being forced by nervous stockholders to cut back on their increasingly expensive investments. None of them bid for Brazil’s last deep offshore leases, which went to the Chinese.

Harvard next.

* * * * * *
Alec Glasgow singing the eponymous song of my headline. It’s about the past human costs of coal, but can also stand for the future ones.

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

38 thoughts on “Close the coalhouse door”

  1. Relevant to this, it's not as easy as one might hope to just invest in Ethical Funds and hope they'll do the vetting.
    I was very disappointed a few years ago to see that the Ethical Fund in which I had invested was doing what they promised in terms of no tobacco, alcohol or guns. (I can't remember the stance on fossil fuels.) But a consequence of this was that they owned a huge amount of financial organizations (of the large bribe congress variety), which didn't strike me a great improvement in terms of making the world a better place.

    If this is something important to one, one does have to look at the fine print to see exactly what's in there and what is not (and how it may change each year) which is more work than one would like, but c'est la vie.

  2. None of them bid for Brazil’s last deep offshore leases, which went to the Chinese.

    The subordinate clause is the critical one. This may be the right thing to do but it won't lead to any change in the amount of fossil fuels actually recovered and burned, because someone will be willing to do it.

    1. It wasn't an ethical decision. The Chinese state firms are talking on a very large risk. The article I linked to claimed it was just Brazil's protectionist conditions, but my feeling is that the majors also reassessed the costs and benefits from such deep water fields.

      1. This pretty much reinforces my main claim: the divestment from fossil fuel companies by universities won't have any significant effect on the amount of fossil fuels that are actually produced and burned. If companies are deciding not to drill because they are worried about the chances that a company will nationalize their operations or because the oil is too expensive to extract, that has exactly zero to do with university divestment.

        1. I think the bit about the oil majors slowing their production growth was meant to be "in other news" rather than presented as linked to the disinvestment stuff.

        2. There is an effect that you’re not considering, namely that divestment is actually reallocation. If universities put some of the money from their sales of carbon-hog stocks into greener ventures, they can potentially help reduce the demand for oil and gas. And universities are also a member of the class of investor that can make decisions about return on a fairly longterm basis. (Indeed, if their investment committees are doing their jobs, they must make their decisions based on longterm considerations.)

          1. This seems like wishful thinking. Yes, if divestment were done in conjunction with a conscious and conscientious program of reinvestment designed to promote green technologies it would be a good thing. Regrettably, there's no indication that any of these universities that are divesting or will soon divest have any interest greater than symbolism.

            The other point is that it will only be possible for new green technologies to displace fossil fuel incumbents in time to save humanity if the development of these new technologies is accompanied by political action that overrides market forces. Otherwise, the green technologies (which don't benefit from massive governmental subsidies and a legal framework allowing them to externalize the costs of environmental damage such as pollution and climate change) won't be economically competitive until it's too late.

  3. Color me entirely unpersuaded. Investment in an established and profitable company should be an entirely amoral process, any opinion to the contrary is simply uninformed. The only time sell pressure has any chance of limiting the activities of a company is when they are actively seeking to raise money by floating shares in order to expand their operations. With the oil majors, the exact opposite conditions obtain; they all (or almost all) buy back shares aggressively. From Ycharts:

    Xom's total float on Dec 31, 2006 was 6.22 billion. Today it is 4.31 billion.

    Chevron's total float was 2.23 billion. Today it is 1.9 billion.

    Even B fracking P has managed to decrease its float in that same period, from 3.58 billion to 3.4 billion (and going back in time from 12/31/06 it explodes upwards… 12/31/06 is basically the worst date you could choose for BP (at around the 10 year past mark) to support my argument, and it STILL works).

    These guys don't rely on the price of their shares to raise money, they use the money they make to take shares off of the market. If you could somehow engineer a share price calamity you might manage to get some corporate officers replaced, but you aren't going to destroy the company or get them out of the oil business. If you could somehow drive the market capitalization of Chevron to $1 (and prevent me from killing everyone that stood between me and buying it for $1) guess what? They still make an unimaginable ###load of money every quarter. What have you accomplished? All you have prevented is a move to raise money by floating more shares, which no shareholder wants them to do anyway. The divestment idea is the opposite of well-aimed. It demonstrates a fundamental lack of understanding concerning equities and the structure / position of large oil companies.

    I have an alternative recommendation for you and anyone else who bothers to think about such things. Buy CVX, use the cap gain and divvies to buy solar panels, electric cars, and to make donations to environment-friendly candidates. There is the truly well-aimed strategy; use their immense profitability to undermine the basis of their business.

    Anyway, I sincerely hope you are right and there is a wave of misplaced ethics-driven selling of these companies… so that I can back up the truck. And believe me, I won't be alone.

    1. You don't address the specific mechanisms I suggested for divestment making oil companies less profitable: reputation, perceived risk, policy vulnerability..

      "Investment in an established and profitable company should be an entirely amoral process, any opinion to the contrary is simply uninformed." Your leap from an "Is" to an"Ought not" is in the dark, or into it. What sort of human being are you to ignore ethics in anything you do? Every conceivable action is either good, bad or indifferent. There may be a counter-intuitive ethical case to be made that locally amoral investment decisions (say gun shops in Soweto) will overall have better results than conscious ethical filters. You don't try to make it.

      1. My response was aimed at the one direct financial mechanism you put forward, namely increasing the cost of capital. I realize now I should have gone a step further on that score. The oil majors buy back more shares than they issue, and thus an effective disinvestment campaign (where effective is defined as lowering the share price) would actually result in an INCREASE in their profitability. I note that this is one of the pitfalls one can fall into when they attempt to apply ethics to a situation in which ethics are actually not at play… which is something I should have been more clear about before. Ethics are simply not a factor in stocks (unless you design some extremely narrow situation in which they company needs to acquire money NOW in order to mess up the world, and the world cannot be messed up in this way unless that specific company gets the money at a specific time etc. etc., which is not at all the case here, as I have proven). To take a position in a stock is to play a game against your counterparty and / or some future counterparty. There is as much room for ethical analysis in the stock market as there is in a game of poker. If you aren't cheating, you have crossed the ethical finish line.

        I am trying to point out that your view of this situation is fundamentally unrealistic. If you did manage to actually exert some downward pressure on the shares, people (including me) would step up and buy them, and so your downward pressure would reverse itself. Even if it somehow didn't and we all joined in a worldwide-smart-money-turns-dumb-collective-unconscious explosion, those companies would be perfectly healthy, and the oil would continue to flow. I am not sure how you imagine endowment funds selling oil companies is going to damage their reputation, increase their perceived risk, or make them more vulnerable to policy changes. It really just doesn't make any sense. They will still be able to afford the lobbyists and campaign contributions and air time, because you have done nothing to their income other than perhaps increase it. Speaking as someone who spends at least 4 hours everyday performing financial research and actually moving real money in real-world equity markets, I have to say it just makes absolutely no sense at all. None of this will work.

        I am familiar with your background to some extent and have read and appreciated many of your posts. You are clearly the more intelligent and educated person between the two of us, and yet I cannot escape the feeling that you don't really follow equity markets closely, that you haven't really thought this out. I think your passion concerning climate change and ethical behavior, while entirely laudable, is leading you into a trap based on a series of unrealistic assumptions about the nature of equities markets and their participants. Or maybe I am, as you imply, an unethical person and so am simply failing to see the light. Either way, best of luck to the people of Bangladesh, and to the rest of us.

      2. Hiro: I'm surprised by your apparent position that share prices are irrelevant to cost of capital, and/or that the investments of oil companies are determined by cash flow without regard to prospective returns. If that's so, better get out now on Gordon Gekko grounds, However, what they are actually doing is responding to shareholder concerns about returns and cutting back capex, as Kopits' presentation documents. They are accepting the price of shrinking the business – and shrinking the business means reducing emissions.
        I did not mean to suggest you were a bad person. Myopic, yes. We all are in our different ways.

        1. Myopic? Fair enough. But seriously, while share prices are of course relevant to the cost of capital, the effect can cut either way. If you are engaged in a sustained buyback and have no apparent need to borrow an amount of money that is noticeable relative to your market cap in the near future, the best thing for the long term profitability of the company is for share prices to decrease in the short term. You have still not addressed this.

          I don't recall arguing that the oil majors are decreasing capex for reasons entirely independent of prospective returns; I argued that endowment disinvestment had an approximately zero percent chance of actually doing any harm to an oil major. I don't see how your most recent response gets you any further on this.

          If I am missing something, and there is actually some way I can vote with my dollar in the stock market, I GENUINELY want it pointed out to me, I am not being rhetorical. As far as I can see, there really just isn't. The way you vote with your dollar is by doing what I mentioned in my first response… buying solar panels, donating to environmental / mass transit candidates, buying high MPG cars, etc. Refusing to invest in an awesome sector and thereby handing over the money I would have made to a guy who is less likely to do the above isn't a good thing. Please do show me where I am wrong.

        2. James, I suspect that what Hiro is saying is that Big Oil has zero cost of capital, since they have more of it than they can use, which is why they are using some of it to simply buy back their own shares.

          My reply to his argument would be in two parts: "(1) Yes, sadly your are probably correct about my ability to influence the companies directly, but I see ownership of shares in any company as actual ownership of a part of that company itself. And I choose not to be an owner of those companies, irrespective of how my ownership or not might directly influence their behavior. (2) And BTW, a mass divestiture by a host of big shareholders would seriously depress the stock price, and THAT would seriously affect the compensation of the executives, since boards and stockholders are very sensitive to stock prices."

          1. In response to

            (1) Do what you feel bro, just so long as we understand that you aren't actually accomplishing anything by doing it, which you have acknowledged.

            (2) In the real world, that is simply not going to happen, for many reasons. In the real world there will never be a mass exodus of shareholders for moral reasons. Never has been, never will be (maybe due to greed, but more importantly because IT WILL NOT ACCOMPLISH ANYTHING). If somehow it were to happen, every savvy investor who wasn't in on the boycott would happily buy up the shares once the price had been driven down by any noticeable percentage. Just imagine the headline "Institutions sell fortress balance sheet massive barrier to entry supercompanys for reasons entirely unrelated to future earnings." I cannot imagine a better way to say "screaming buy" to an investor.

          2. Think globally, act locally.

            It's all any of us can do, although some of us have larger localities than others.

            I think Ken's point is on all fours here: "I choose not to be an owner of those companies…" If enough of us choose this, the oil companies will feel it. University foundations are jointly capitalized at nearly a half a trillion dollars. That is a huge block of investments. What is more, as we saw in the South Africa divestment, University foundations are thought and action leaders.

          3. I don’t see why divestment, even on the scale you and Wimberley are hypothesizing, would drive down share prices for companies that continue to have the same or higher levels of profitability. Stanford, for example, concedes the buyers of their stock will likely see the market value of their purchase go higher because of increasing demand for coal. Unless the burning of fossil fuels are drastically reduced, divestment means nothing more than the voluntary transfer of profits from Stanford to people of a less delicate sensibility.

            The South African analogy seems particularly inapposite because divestment hurt their economy while divestment in this context will have zero economic effect on fossil fuel companies. Their share price will be determined by their profitability, which, in turn, will be determined by the amount of fossil fuels being consumed. There is, for example, huge demand for coal overseas, particularly in parts of Asia and South Asia. Not only to provide for cheap electrification in those places but also to accommodate a huge, growing and environmentally unregulated manufacturing base. The use of fossil fuels in such places seems to be probably the major driver of climate change. I don't see how divestment by American universities is going to stop China from buying and burning coal, so I don’t really see the point.

            Similarly, shunning and heaping opprobrium on South Africans was an effective tactic against apartheid because most of them thought of themselves as basically good people who shared a common morality with their European ancestors. They were therefore open to moral persuasion. I think you’ll find that the Koch Brothers and their ilk are made of sterner stuff.

  4. "Harvard next."

    Nope. Whatsherface (the President of Harvard) already spoke. What was hysterical was that she couldn't even space her contradictory statements apart (you don't put them sequentially).

    1. Harvard’s position is much more sensible than you seem to credit. As I understand it, Harvard argues that divestment is counterproductive since it will not change the amount of fossil fuel consumed but merely transfers fossil fuel profits for others with less refined sensibilities who probably won’t spend their loot on buying nice things for Harvard. Since the likely buyers of divested stocks won’t spend their profits to improve either Harvard or society as a whole, so why shouldn’t the money go to Harvard instead of somebody else?

      1. Nice Renoir this. Pity about the former Jewish owners, but I can't do anything for them now. If it doesn't hang on my wall, it will go to some oaf who will appreciate it less than me.

        1. I don't think the analogy is an apt one because the Renoir under discussion rightfully belongs to Harvard. They want to keep the painting and the benefits it provides. You want them to sell it and forgo those benefits, so it should be up to you to demonstrate that the sacrifice you ask of them is likely to result in a better world. In any case, whatever good Harvard might do with the forgone wealth isn't being considered as a cost of divestiture.

          It's also a bad analogy because, unlike the buyer of stolen paintings, the prospective buyer's means of acquisition is morally and legally acceptable as the product of a bargain freely entered into by both parties. In your preferred scheme of things, Harvard would choose to sell its stock in response to pressure from the pro-divestiture movement, even though the stock will continue to produce a handsome income and likely will continue to rise in value. Significantly, Harvard wouldn’t be selling for economic or its own deeply held moral reasons but, at least in some sense, simply because of pressure and coercion by your group.

          The buyer, on the other hand, either sees no stigma or is willing to bear the stigma associated with ownership in return for a lot of money. But, again, he will acquire the painting from it’s rightful owner in a fair bargain. He wouldn't be the one forcing a university to relinquish its stock to him at firesafe prices. And, as others commenter on this thread have demonstrated, the future economic value of that painting will rise or fall in line with demand for fossil fuels.

          With apologies for continuing to beat the same dead horse, I still don’t see how divestment by universities will bring about any worthwhile improvement in the fight against climate change and, indeed, it seems to me that, by diverting energy from efforts aimed at actually reducing fossil fuel burning, it might actually makes things worse. I believe our efforts would more productively be directed at forcing reductions in fossil fuel burning by political action to designed to place absolute restrictions on pollution and also to prevent energy companies from externalizing the true costs of their activities and by removing all subsidies from those companies.

  5. "I'm surprised by your apparent position that share prices are irrelevant to cost of capital, and/or that the investments of oil companies are determined by cash flow without regard to prospective returns."

    James,

    I'm not sure what the second part of this sentence is intended to convey, but share prices can certainly be irrelevant to the cost of capital. Let's say that divestment initiatives drive down the share price, and keep it low. (Though once all the divesters have divested, it's not clear that this will happen.) If the companies' underlying operations are as profitable as ever, they can provide their shareholders a return via dividends. This is not the case with a company that relies on rapid future growth for its value, and generates no spare cash. But I don't thnk the large energy companies are in that category.

    I think the strongest argument for divestment is a simple moral one: You divest so as not to profit from activities you regard as unethical. It requires no financial analysis to come to ths conclusion.

    1. I agree with your second paragraph. Speeding up the ruin of the fossil fuel companies is a secondary and chancy benefit, and I should have said so explicitly – it’s implicit in my second paragraph.

      But I remain unpersuaded by your and others' arguments that large-scale divestment makes no difference. Agreed that it does not affect the earnings of the companies in the short run. The issue is what they do with them: distribute, via dividends or share buybacks, or reinvest? The climate change objective is to shrink the businesses, not lower their share prices, so if divestment encourages distribution, it works. What's the difference with Apple? It makes so much profit that it can finance expansion from earnings and still accumulate a cash mountain like Smaug. It faces no tradeoff between capex and distribution. Kopits' evidence indicates that oil companies do. Coal companies? Dunno. But they are doomed much sooner than oil.

      1. EEGADS! In the last year Exxon made 31.9 billion. Apple made 35.26. You cannot be saying that the difference is in that 3.3 billion difference!? The numbers simply are not there boss. Because of its repatriation issues and Mr. Cook's desire to run a beefy buyback program, Apple HAS actually been raising money by selling debt (it DOES face a tradeoff between capex and distribution). A major disinvestment program aimed at Apple would have some chance of arresting the shareholder return program (by making their cost of borrowing more expensive through shredding the market cap). The oil majors have plenty of cash and future earnings to drill and pursue their divvy and buyback plans. Tools of the heart are no substitute for actually doing the research.

        I also want to address the "refuse to participate even though it would happen anyway" argument. The reason it doesn't work for the SS guard is that he wasn't truly facing a binary situation. It was not shoot or be shot and then someone will shoot them anyway, he could have turned his gun on the other guards and actually damaged the German war effort and the machinery of the holocaust. In other words, he could have actually hurt the oil major. Stanford cannot. As I have demonstrated repeatedly, their need for capital is negative. I have taken us through the thought experiment in which you get some shockingly large amount of investors to disinvest, and shown that the operations of the company continue. If they canceled the dividend and ceased buying back, they would easily have enough money to drill at a greater rate than they ever have. Now perform that experiment with the SS… if a large percentage of them had raised their arms against the Reich, would the Reich's operations have continued? No. This stuff is not amenable to ethical truisms. It is FINANCE.

        I officially resign as the mood-killer / myope / moral cretin of the thread. If you guys think I am so bad, you should try talking to an actual market operative about this stuff (he would literally laugh in your face). My only intent was to inject some reality into the discussion, because it has been very seriously light on that score. My parting thought is this: Coal companies have been a massive loss makers in the last several years. Massive (I could prove this by blowing up the page with numbers, but I am just going to assume you guys trust me when it comes to numbers). Investors in BTU and the other coal majors have received an absolute shellacking. Coal is actually at risk of imminent regulatory action. Oil has been paying large dividends consistently, buying back shares, building up the book, is at little to no risk of regulatory action until Florida starts taking on water. Stanford takes a very public righteous stand… on the at-risk loss maker. Coincidence?

      2. I don't see how divestment reduces the profits of the fossil fuel companies in the long run, either. Neither do I understand the tradeoffs you are speaking about. These seem to relate to the price of oil remaining high enough to justify risky investments in new production. Divestment won't alter this calculus of values at all.

        In the absence of political action to override market forces and impose forced reductions in the use of coal and oil (both at home and abroad), I don't see the reductions of profitability or a decline in the share price until it's too late. Only actions which directly mandate reductions in fossil fuel burning or which dramatically override market forces such as globalization can be effective within the time available.

      3. That's a good point. Let me try to formalize the situation a bit.

        Suppose a company has $1 million in cash, and $750K in good (leaving the definition of "good" aside) investments available. So, in the abstract, it distributes $250K and invests $750K. The expected return on the $750K, even though it's in the future, is reflected in an immediate increase in the value of the stock. This means that shareholders can sell the future dividends at their present value any time they want to.

        But suppose the stock price can't rise, maybe because many investors just won't buy it, or for some other reason. So shareholders can't sell the future dividends. They have to wait to actually get them. Hence they lose, not return, but liquidity. One possible consequence, which I think is what you are arguing, is that shareholders won't be patient, and will insist on nonoptimally high dividend payouts. In the example they may force the company to pay $300K say, rather than $250K. Now it gets tricky. That may lead to reduced investment for lack of cash, or it may induce the company to borrow the extra $50K. But even borrowing will reduce investment, because it will raise the cost of capital (else they would have already been using debt financing). So that seems to support your point.

        A different scenario might be that the stock price drops enough that buyers are willing to put up with lack of liquidity, and the stock will end up in the hands of those to whom liquidity is less important. Besides, once it reaches a certain level it will be worthwhile for some investors who are concerned to rearrange their portfolios so as to have greater liquidity from other sources.

        As a practical matter, my guess is that the first scenario – yours, I think – will certainly come to pass to some degree, though how far, and how these effects will interact, is, to say the least, murky.

  6. I just realized something else; the two different threads in the post cut against each other. On the one hand Mr. Wimberley is happy that the western oil majors (although not, as Mr. Neal has pointed out, the Chinese) have apparently elected to slow their capex, while on the other celebrating the pie-in-the-sky notion that the disinvestment scheme is going to somehow apply pressure to the western majors financially by increasing their cost of capital when the shares go way down in price (forget that this will not happen because we live in the real world and forget that the oil majors do not need to borrow money (and their need to borrow would provide the only situation I can imagine in which they would want their market cap to stay high)). But if the western majors are going to be slowing their capex, their need for capital falls even lower than the negative value at which it already sits.

    The only theme with any realism or consistency in the post is a strong hatred of oil companies. The rest of it is, I think, entirely out of joint.

    1. Not hatred but pity. If things really go south, oil and coal bosses will be hunted men, but not by me.

      1. But the owners of these fossil fuel companies almost certainly won't living in our dystopian future as hunted men. They will be its rulers. Their vast wealth will not only guarantee their safety but will probably insulate them from the nightmare everyone else will be living.

        That is the problem with approaches to climate change that rely upon either moral suasion or "market forces" to dislodge harmful incumbents. Someone will buy the stocks that Stanford sells, the coal and oil will be burned and the incumbents (fossil fuel companies) will take all they can today and let tomorrow take care of itself.

        1. "Their vast wealth will not only guarantee their safety .." Your dystopian vision is a lot sunnier than mine. In a Mad Max world of social breakdown, the skills of violence become the only ones a leader must have. Rex Tillotson, meet Fulk Nerra, Duke of Anjou in 1000 AD. Fulk burnt his wife alive for adultery. That’s the sort of person who will rule. Fulk may organise show trials to keep his followers happy. Or bands of terrorists motivated only by revenge, like the Armenian ones of the 1920s that targeted the Turkish organizers of the 1915 genocide, will pursue those they hold responsible for the deaths of their families.They won’t have anything else to live for and like the Assassins or el-Qaeda will be ready to die in order to kill.

          1. Yes, my best guess is that we end up with something closer to "Soylent Green" or "Blade Runner" and much less like the post apocalyptic future of "Mad Max". Basically, a world that bears a superficial resemblance to our own except that it is largely depleted of its resources, overcrowded, horribly polluted and unimaginably corrupt. A world that is gradually descending into Hell, inch by barely perceptible inch. I see no reason why the wealth and power of the Koch brothers and other super rich families wouldn't carry over into such a disopian future.

  7. For me, it is okay that someone has stood up and said, it is time we all did something about this climate change thing. We in the US are in a very sad state of denial. People do these things because we see little hope of any meaningful federal action, we are one of the biggest causes of the problem, and the future is truly looking quite scary.

    I am also glad to hear a vigorous debate about whether this action has any value besides the symbolic. I hadn't thought about Hiro's points and I am glad he/she made them. And I certainly agree that if one wants to engage in a market, it is important to realistically predict outcomes.

    I am going to chew on it some more, but meanwhile, even a really far-off thing, like a carbon tax, will get passed on to consumers. So be it. It is about as likely that we could come up with a cushion for poor people as that we could pass such a thing to begin with. But if we don't dream of it, if we don't even dare to dream or talk about it, then it for sure won't happen. And we know where that leads. Symbolic is better than nothing, and someday soon, oil/gas will have to actually compete. Maybe even on an even playing field. Having said that, actual progress is of course preferred to the merely symbolic. But you've got to have that sense of urgency first, and so far, mere fact isn't getting us there as a society. Someone has to stand up and do *something.*

  8. The less my financial well-being depends on the fossil sector the better. I'm fairly persuaded that divestment would not directly impact the fossil sector's bottom line much if at all. But I think what some of the commenters are tripping over is an assumption that divestment is some kind of linchpin to undo the oil & coal. Divestment will never be enough. Political action will always be required. And I think having fewer investors in that sector makes it easier to build political support for measures that can shrink the business.

    1. Absolutely. One of Hiro’s comments beautifully exhibits what you might call the “lump of concern fallacy”. It’s true that individuals have to set priorities: you can’t be lobbying effectively for campus divestment and protesting Keystone and highlighting deforestation and agitating for public transport. That does not generalize to political movements of tens of thousands of individuals. Your resources are not independent of the number of sub-targets; in fact the more you have, the more you can mobilize supporters with different interests and priorities. The military axiom of concentration of forces does not therefore apply to political movements. Surprise is impracticable, except for media stunts by Leninist organizations like Greenpeace. Multiplying targets forces your adversaries to divide their resources too, and since in this case they are more centralized and with no mass support, this is a much more serious problem for them.

  9. I am embarrassed to say that I don't follow. Which comment of mine implied that picking a single issue was best for a political movement? If you are referring to me saying that divestment is a waste of time and you should buy solar panels, EVs and donate to environmental candidates… then you have somehow managed to not extract the one thread that ran through all of my posts (which can be forgiven, I am a terrible writer). I was saying what I have been saying the entire time, divestment will do absolutely nothing, other actions might actually accomplish something. Efficacy is the only thing I have been discussing in this thread.

    Oh and by the way Mr. Wimberley, your comment contrasting apple to big oil is totally wrong on the numbers and the finance, I wrote a mini-essay on it and then tried to edit it which caused it to be deleted (that or the mod got tired of reading my essays). I encourage you to read up on the borrowing activity of AAPL, the reasons for it, and to then contrast it with Exxon, which made a nearly equivalent amount of money in the last year. The oil majors can expand their operations while distributing to shareholders while piling up mountains of gold. Not only CAN, in fact they actually do. That is kind of what I have been saying the entire time.

    1. You wrote: "I have an alternative recommendation for you and anyone else who bothers to think about such things. Buy CVX, use the cap gain and divvies to buy solar panels, electric cars, and to make donations to environment-friendly candidates." On reflection, you do not commit the lump-of-concern fallacy but a worse one. Buying Chevron's shares gives you a share not only of its profits but its guilt. If I'm right, it's also very poor investment advice. People like me, and more importantly like Elon Musk and Miao Liaosheng, are trying to destroy the company, and will. Better use the $10,000 simply to buy the solar panels.

      1. Good, I was worried your comment indicated that I had missed something rather than indicating that you did not understand what I have been saying. I am relieved. I think owning shares in an oil company and using the proceeds to destroy the business of the oil company is elegant, nuanced, and actually sort of brilliant. I find your condemnation of the strategy to be quite the opposite; a celebration of moral taint black and white thinking combined with a lack of understanding of equities markets. The fact that someone of your intellectual caliber has been systematically misreading and failing to understand my comments is surprising. The explanation must be, as I had previously written, that your righteous passion concerning climate change is fiddling with the formidable machinery that sits between your ears.

        The smart money is betting that every last drop will be burned and that the majors will continue to be wildly profitable. The oil that isn't sucked up by western majors will almost certainly be sucked up by the Chinese (and on balance, the Chinese going for it is likely to be worse for the environment). Barring cold fusion or the emergence of a new positive feedback loop in the climate change process that damages 1st worlders SOON, I think the smart money has you.

        You have my vote and my political contributions, even my willingness to stand on a soap box and scream at deniers… but when it comes to anything related to money and markets (and ethics concerning them), you have lost my ear.

        Good luck.

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