The ESG movement has done some good and bad to the energy market. Does the bad outweigh the good?
If you have been around me for 5 minutes, you know that I love what I do and those running down the road with me. Talking about oil, rocks, drilling, and how much production was yesterday are all at the top of my list. It drives my wife nuts at dinner parties, and she swears she won’t let me out of the house again (just kidding). Although it sounds backward, taking a moment and asking how others are doing has served me well.
The energy industry encompasses nuclear, wind, solar, hydro, oil, and gas, and we need all of the energy we can produce to help rid humanity from poverty. Everyone should have the availability of the lowest kWh energy with the most minimal impact on the environment. Basically, let the markets decide.
On February 28th of this year, I wrote an article that was picked up by some news sites. While some of the topics are now worth updating, the article had some great tidbits. (Even if I do say so myself).
“ESG is one of the most important items that face our world today. Climate change hypocrisy is one of the biggest problems facing actual gains in reducing carbon emissions on the way to Carbon Net-Zero. We can see that the current administration does not understand what it will take to keep energy prices low to the consumers. Asking Saudi Arabia to pump more oil won’t lower gas at the pump.”…
…” Doubling down on proven bad energy policies will only double the problems. For the consumers, it just means that there will be more pain at the pump and the world’s investors are looking at places to invest their money that has the potential to survive the world energy crisis.” -Jay R. Young
Looking at that article, it is very prophetic, especially when you consider the recent actions taken by the Biden Administration to go beg for oil only to have OPEC + increase their production quotas by 100,000 bpd and canceling more leases this week on federal lands. These continued actions will have only one outcome: higher prices for consumers.
So, let’s look at some updates that have cracked the ESG investing model. First, I believe in ESG and the positive things it represents. I am not a fan of a ESG-mandated investing, or regulations, or forcing an energy transition when the technology is not ready. Some of the things in the Energy Crisis have opened many people’s eyes to the very topic ESG hypocrisy investing is a real thing.
Investors can only take so much in losses or propose tax increases that our congress is talking about in current legislation. We found the price point of ESG investing returns, and BlackRock’s negative $1.7 trillion dollars in six months is just one of the tipping points. BlackRock was starting to give earlier subtle messaging that they were looking at energy and included natural gas, much to the dismay of the investors. So, Larry Fink, CEO of BlackRock, knew that his investing in ESG renewable without the tax credits was going to be a problem, even before the rest of the investment community had to do a facepalm .
The Bottom Line
Have you ever heard your mother say, “don’t do it because it will hurt” and then you do it anyway? Well, for some kids, it takes two or three times to realize that mom was right, me, I paid attention to mom’s wise words more so than my friends.
The ESG investment community is very much like my friends that did not listen to their moms, and our politicians are in the same boat. If printing money increases inflation, stop printing money. If the energy policies are not working, find a working solution.
In the Wall Street Journal, they posted; “The deal would spend roughly $369 billion on climate and energy programs, including tax credits for buying electric and hydrogen vehicles. It provides numerous incentives to accelerate the build-out of wind and solar farms, as well as large-scale batteries to store their output for use when production declines. It also has provisions that benefit fossil fuel companies—requiring the Interior Department to offer oil companies millions of federal acres onshore and offshore over the next decade—as well as support for nuclear power production.”
So, if Europe and the rest of the world understand that printing money is one of the reasons that they are facing inflation, and putting all of your energy into technology that is not ready to sustain low-cost kWh would not work, you would think that somebody would take the hint, “don’t do that, it’s going to hurt."
We are going to see more ESG investments trending to natural gas as many people have listened to “mom’s” advice, and in Europe you are seeing LNG and nuclear projects starting. It is very sad that our current administration is not going to listen to “mom,” and keep doing things that do not work.
As to my comments in the top of the article, when you ask how someone is doing, you can find out a lot about them, what their concerns are, and items impacting their lives. When you find out what is important to others, you can learn new ways to solve their problems. Ask them what kind of solutions they have considered, or have they heard of people that have been successful in solving their issues.
Just having the ESG, politicians and the green movement folks ask; “Hey, what do you think?” would go a long way to solving the Energy Crisis.
As always, check with your CPA if alternative investments are good for your portfolio
Take the assessment and see if it is right for you HERE.
Please reach out to our team at any time for answers to your questions. Jay R. Young, CEO, King Operating
ForbesBooks Author of "The Upside of Investing in Oil and Gas"