In his essential book, “How the World Really Works,” scientist Vaclav Smil writes of modern urbanites’ profound ignorance about the energy and material requirements of the modern world. “We are a fossil-fueled civilization,” Smil writes. “We cannot simply walk away from this essential determinant of our future in a few decades, never mind years.” Smil ascribes the delusive belief that society can forsake fossil fuels to a commingling of fact and fiction, making gullible minds susceptible to cult-like visions.
Ultimately, it’s the government’s job to keep the lights on; if they go out, elected politicians get the blame and voters pick up the bill. But it’s different for Wall Street. Financiers don’t have to fall prey to other people’s delusions to profit from them. They can make money out of the beliefs of others, however ill-founded—and Wall Street’s embrace of environmental, social and governance (ESG) investment can be seen in this light.
Financiers seized on ESG to rinse away the stain of causing the worst financial crisis since the Great Depression. Even better, it gave them a chance to charge premium fees for ESG over plain-vanilla investment products; to adapt Wall Street’s cynical ESG sales patter, financiers doing well by appearing to do good. Thus, Wall Street’s path to redemption would be by parading its green virtue; the collateral damage to the real economy and to living standards from the greening of Wall Street was of little concern, except for the growing political blowback in red states.
All energy sources, Liberty’s ESG report notes, have positive and negative impacts on humans and their environment. Since the birth of the oil and gas industry in the second half of the 19th century, global life expectancy has doubled, extreme poverty plummeted, and human liberty expanded. “The timing here is no coincidence,” Liberty says. “The surge in plentiful, affordable energy from oil, gas, and coal enabled this progress in the human condition.” The transformations that brought about the modern world could not have occurred without fossil fuels. “No current industry could exist in recognizable form without the energy and materials from hydrocarbons, including electricity production from hydroelectric, nuclear, wind and solar sources.” Neither could the world feed eight billion mouths without hydrocarbons. Natural gas accounts for 80 percent or more of the cost of producing nitrogen-based fertilizer.
A major focus is the alleviation of energy poverty. Over the last twenty years, one billion people around the world gained access to electricity for the first time, but nearly one billion still have no access to electricity and another one billion have only intermittent access.
More than two billion people cook their food and heat their homes by burning wood, animal dung, or other forms of biomass, creating indoor pollution that the World Health Organization reckons kills three million people a year from breathing PM2.5 particulate matter. Using propane cooking stoves means clean indoor air. Thanks to the shale revolution, the United States now supplies nearly 50 percent of global propane exports. Liberty fractures wells supplying propane to around 100 million people. By any measure, that is positive impact.
Under-investment in hydrocarbons and associated infrastructure driven by political, regulatory, and investor pressure, says Liberty chairman and chief executive Chris Wright, has brought about the greatest threat in decades to energy security, reliability, and affordability, a crisis exploited to the full by Vladimir Putin. In continuing to pursue their campaign against fossil fuels, ESG investors posing as planetary saviors are objectively, as Marxists are wont to say, doing Putin’s work.
In her deluded remarks on ridding America of fossil fuels, Secretary Yellen boasted that President Biden’s decision to release one million barrels of oil a day from the nation’s Strategic Petroleum Reserve had cut the price of gas by 17 to 42 cents a gallon. How does she think the Strategic Petroleum Reserve is going to be replenished? Without pumping oil from new wells, those price reductions are likely to reverse. The Treasury secretary saying the government wants to be rid of the oil and gas sector is evidence not just of gullibility and ignorance, but of extreme folly.