As a proud CEO of an oilfield service company founded in Oklahoma City, I was happy to see a damaging trend among local and state governments finally receiving the attention it deserves.
A recent Oklahoman editorial pointed out that big city public pension funds from New York to San Francisco are choosing to “divest” from fossil fuels, adopting the same tactics used against the tobacco industry.
As the editorial noted, the American Council for Capital Formation found that the New York City Employees Retirement System is chronically underfunded primarily because its investment decisions are being driven by politics, not economics.
ACCF found that nine of the system’s 11 worst performing funds are focused on environmental, social and governance issues, underperforming the market by more than 600 percent over the last three years. Meanwhile, the public pension system is just 62 percent funded, well short of the 80 percent minimum to be considered a healthy fund by financial analysts.
Unfortunately, not even the crater-sized hole blown in New York’s pension fund by politicized investment decisions has convinced some policymakers of the error of such virtue-signaling.
In California, financial administrators at the California Public Employees Retirement System (CalPERS) are barraged with divestment requests for many different social causes — including tobacco, fossil fuels, and the nation of Turkey — that they are pleading with the legislature to stop politicizing financial decisions. Their pleas are understandable given the CalPERS’ $138 billion in unfunded liabilities and the portfolio of unprofitable “green” funds it holds.
Comparisons of the current anti-fossil fuel campaign with previous divestment efforts against tobacco overlook an important factor – cigarettes are not a necessary component of the economy or something that every American must buy multiple times a day.
There was never any question of whether our country could function without cigarettes. Traditional fossil fuels, on the other hand, power the trucks, trains and ships that deliver food, goods and medicines to every corner of the country. They also make our fertilizers, plastics and asphalt, not to mention light and heat our homes, schools and workplaces.
Whether or not you support alternative forms of energy doesn’t change the fact that the many forms of fossil fuels are going to be with us for many decades to come.
The New York Times summed up this point when it wrote “Mr. de Blasio and his predecessor, Michael R. Bloomberg, are the very embodiment of a possible line of defense by the oil companies. Namely, that it wasn’t the oil companies that created the greenhouse gases, but society in general — companies and individuals who used oil to generate electricity, or for transportation.”
In other words, we rely on fossil fuels because they are the most efficient source of energy ever developed and their overall benefit to society far outweighs their cost.
Targeting the hard-working men and women of America’s fossil fuel industry may send the right signal to environmental special interest groups, but it ignores the economic importance of the oil and gas extraction and refining sectors provide many communities.
Americans need to have an honest conversation about how we can best use our resources responsibly without harming the economic recovery or condemning millions of people to lives of poverty.
Simply blaming traditional energy companies for delivering on the promise of affordable and abundant energy is not going to deliver a better future. It doesn’t help cities, it doesn’t help pensioners and it doesn’t provide real solutions to our environmental challenges.
Dan K. Eberhart is CEO of Canary Oilfield Services and an energy consultant.