Starving the petroleum industry of capital is, as usual, too boneheaded and environmentally counterproductive for words

A year or so ago a picture circulated the web, a photo of an emaciated and sickly-looking polar bear. The poor beast was elected the new poster child for climate change  (a disgusting claim since the bear was clearly ill, and the photographers made no effort to help the poor animal because they wanted to use the image to promote impending climate change doom) and the gaunt, sickly figure garnered 2.5 billion views.

Apparently thrilled with that success, the fiercely powerful climate change movement is now determined to make the petroleum industry look like that cadaverous bear by starving it of capital. Banks, pension funds, university endowment funds, and anyone else with two nickels to rub together is being hounded to divest all fossil fuel investments. By doing this, climatic advocates assume that global CO2 emissions will be reduced.

The thread of logic behind this thinking is not very impressive. The plan might have some merit if starving the energy industry of capital led to reduced consumption, but it doesn’t take much of a monkey to see that’s not going to happen. Consumption is as consumption does, and every time one of those activists chooses to climb on a plane or heat their home or poke their cellphone or dine on food that originates further than their neighbourhood they are contributing to the global consumption pattern that creates emissions. In other words, each and every one of those consumers could not care less about whether a pension fund is divesting its ExxonMobil shares; that is not a factor in the decision of which tropical resort to go rest weary bones at.

What the capital-starvation strategy will do is make it more difficult for petroleum producers to produce, if they are located in jurisdictions with open markets. There will be two consequences to this state of affairs. First, there will be global shortages of petroleum since consumers keep consuming, which will drive up the price of petroleum, and will encourage capital inflows (since capital loves strong and growing returns).

The second consequence is that the capital will come from jurisdictions that are not being strangled by orchestrated enviro-campaigns. That is, North America and western Europe may see petroleum-destined capital disappear, but Asia will not, nor will Africa, nor South America. In other words, capital (and production) will come from jurisdictions with lower environmental ambitions than western Europe or Canada or the US.

Will this in any way be good for the environment? Of course not, and it will be bad in multiple ways. The petroleum will continue to be consumed, and it will come from places that are not as environmentally scrutinized as North America or Europe. Many decry Canada’s oil sands as being environmentally devastating, yet no one ventures to compare the oil sands with, say, the Fyodorovskoye oil field. Is that one better or worse than Alberta’s oil sands? Well, it’s in Western Siberia so we’ll never know, and it (and many more like it behind unfriendly borders) will supply more and more of the world’s growing (yes, still growing) demand for petroleum.

This is simply yet another example of the complete absence of logic in many of the more boisterous climate change campaigns. I’m sure all the activists aren’t stupid though, so they must have other motivations beyond CO2 emissions. Let your imagination run free; it probably won’t be far off.

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