A Christian defense of energy

Yesterday, ExxonMobil, the world’s largest publicly traded oil company, and fellow giant Chevron had their annual shareholder meetings. As has been the case for decades, the ballots of these companies are littered with resolutions by activists that urge them in various ways to stop being oil companies.

It’s almost never packaged as an explicit directive to give up fossil fuels. Most activists take a more gradualist approach, progressively upping the level of demand over time. First, activists pressured companies to make acknowledgements about the alleged role of fossil fuels in global warming. Then came resolutions to study the risks associated with it.

Over time, companies were cajoled by means of requests for assessment of “risk” into confessing to responsibility for various social and environmental harms that allegedly will come if they do not impose on themselves commitments to “net zero” carbon emissions by a certain date. But when companies agreed to some of the activists’ demands, the activists were emboldened, not appeased.

If you’ve agreed, Board of Directors, that your product causes harm and that you will eventually stop selling it, then why not do it faster? Why not estimate precisely what the risk will be from possible litigation (and give trial lawyers a nice big fat number to shoot for)? Why not include in your confession of environmental sins, not only your direct contribution to carbon emissions, but also “scope 3 emissions,” i.e. the environmental sins of your supply chain and customers? Why not publish a detailed plan for decarbonization so that we can hold you to it? Why not admit that if you sell your oil fields, you haven’t really decreased carbon emissions and so refrain from counting divested fossil fuel assets as a credit against your climate sins? If you agree that the future is fossil free, then why not follow good accounting principles and write down the value of those oil fields and gas deposits, taking the loss now for their inevitable loss of value in the fossil-free future?

Energy companies, banks, tech firms, and now consumer product companies, have been deluged with proposals telling them to lay out, in a myriad of ways, the risks of producing, selling or using the only practical source of energy on which the modern economy runs. This year, however, financial advisor David Bahnsen has started to ask America’s largest publicly traded oil companies to do something else. He has asked them to study and report the risks of not being oil companies any longer.

After so many demands from activists pretending to be looking out for the interests of shareholders, Bahnsen is asking the question that is really looking out for shareholders. In his speech to fellow shareholders he asked “what the risk would be if the company actually gave in to activists’ demands and divested itself from fossil fuels. What if the activists got their wish? What would happen to investors (let alone the world) if the world’s largest investor-owned oil company stopped being an oil company?”

I think we know the answer. It would be financially devastating. Oil companies know that fact, which is why they have resisted (though not as much as one would hope) the demands for a fossil-free future. What’s different now is that the request to defend the business they are in is coming from a shareholder, not from management.

Of course, Bahnsen’s proposal lost. Shareholder proposals almost always do, especially ones not of the left. But his strategy succeeded in reframing the issue as no longer owners vs. managers but those without skin in the game vs. those with skin in the game. Almost all the oomph for ESG (environment, social, governance) investing comes from hirelings. Highly politicized blue state pension plans are a major source of pressure for decarbonization as are gigantic asset managers such as BlackRock, who invest other people’s money and charge extra for the ESG products. Proxy services are neither investors nor managers and have the least skin in the game and paradoxically the most influence on the proxy vote outcomes.

Christians should be at the forefront of questioning the rush to throw away the gift of fossil fuels. The Bible differs from paganism in giving to mankind both the principle of stewardship and the dominion mandate, a command not just to fill the earth, but to subdue it. Subduing the earth requires energy. It was only when the Christian West created institutions based on private property rights, including mineral rights to what lies below the surface, that the economy moved from sweat to abundance. Before that is lightly cast aside in the name of an ideology of sustainability that looks more like a secular millennialist religion than science, we should count the cost.