In an op-ed in the Wall Street Journal Wayne Stoltenberg and Merrill Matthews point out something that should be obvious but apparently isn’t about energy production:
Devon Energy recently issued guidance for 2022 that refers to capital spending in the range of $1.9 billion to $2.2 billion on new-well drilling and completing activity, and a production target of 570,000 to 600,000 barrels of oil equivalent a day. That’s a modest increase in capital spending, from $1.85 billion in 2021, and a modest decrease in production, from 611,000 in the fourth quarter of 2021. Devon also anticipates increased cash returns to shareholders for 2022.
Like many in the industry, Devon obviously believes it’s better to return capital to its shareholders than to reinvest in the business. The reason is the left’s incessant demonizing of the fossil-fuel industry, leading to near pariah status, which has succeeded in driving capital away from the industry. Small and midsize producers rely more on outside capital than larger companies such as Exxon to increase their production.
Consistency and stability foster investment. Uncertainty and wild oscillations in policy discourage it.
Germany is already learning to its chagrin the costs of its short-sighted strategy for reducing carbon emissions—it has closed its nuclear reactors and started burning coal again. That would seem to be a counter-productive strategy if your objective is to reduce carbon emissions. India is reopening coal mines at a prodigious rate. Here in the U. S. we are anticipating rolling blackouts in various places around the country.
Good policy doesn’t produce situations like this. Political pandering does.
So because people say mean things about fossil fuel the energy company doesnt want to pump oil at record prices? At least half the country believes climate change is not an issue and those people wont invest in energy? Seems a lot more likely that after taking a beating during the pandemic they want to return money to investors and arent certain how long the boom in prices will last.
Steve
ESG Investing by Black Rock and Vanguard.
Most people don’t hold individual stocks, they own ETF’s now.
When you hold a stock, you get a vote as a shareholder.
When you own a share of an ETF, the ETF holder has all the votes.
The major financial players own the most ETF sharea and are activist investors – and they are all in on ESG investing.
In November only 10% of people were actually ESG investors. It gets talked about a lot but it looks like not that many people do it.
https://news.gallup.com/poll/389780/investors-stand-esg-investing.aspx
Steve
“So because people say mean things about fossil fuel the energy company doesn’t want to pump oil at record prices?”
Son of a gun. When did Joy Behar find GE? Not a very insightful comment on the investment decision making process, steve.
As GuardDuck observes, most people don’t invest directly, its the money managers. Its huge in Europe.
But one ought to consider something: Al Gore told us the polar ice caps would be melted by now. Yet this year the ice mass is the biggest in 30 years, even with 30 years more of CO2. Suppose you were all in on ESG, and put your money into saving the ice caps. Looks pretty silly now.
As I noted a couple days ago, its really a disclosure issue. Historically the big three no-nos for capital providers have been tobacco, firearms and military weapons. Black Rock can piss away their clients money chasing solar power, but they need to disclose it. And they won’t get my money.
PS – and what does Germany’s folly mentioned by Dave tell you?
What I notice is that only 10% of people actually act on ESG.
“tobacco, firearms and military weapons”
Must be why the US does so poorly in weapons sales.
Steve