How Much Oil Company Stock Do You Want To Be Holding When Snow and Ice Fall?

My colleague Jim Greenberg from Ocean Thermal Energy Corporation published something today that I wanted to pass along.  Here’s a pithy excerpt.

The observation that investing in fossil fuels is getting riskier is shared by some major players in the investment and financial industries.

These players are moving away from investing in fossil fuel because of its tremendous volatility as well as the global trend toward renewable energy mandates resulting from climate change….In late 2013 a group of more than 70 fund managers/investors with approximately $3 trillion in assets under their management sent a joint letter to the Board Chairman, CEO and CFO of British Petroleum to express concern for the security of their investments in BP and the oil and gas industry. These investors described their worries based upon “…the climate change-related risks facing fossil fuel companies—both from current and future policies to reduce greenhouse gas (GHG) emissions as well as from the physical impacts of climate change.”

To Jim’s point concerning price volatility, there is no doubt that he’s correct.  Volatility has a cost in and of itself, as I explain here.

His other topic is even more important, and can be summarized as follows:  oil companies are telling investors that there are no challenges associated with their business model, i.e., extracting the virtually limitless volume of fossil fuel from the Earth’s crust and burning it.  Investors, however, are not too sanguine on this, and becoming less so with each passing moment, whether their reservations are practical, moral, or both.  Each year will bring more push-back, until the bottom falls out of the oil companies’ operations.

Investors really are leaving, but when will the critical mass be achieved?  A year or two?  Could it be a decade?

No one knows, but no one wants to be on the slopes when the avalanche rolls through.