Recently, New York City announced plans to divest $5 billion in fossil-fuel investments. Mayor Bill de Blasio has decided it’s good politics to declare war on the fossil fuel industry and is trying to make a boogeyman out of the fuels that are literally the lifeblood of his city.
Think about the importance of fossil fuels in the United States: Rising oil and gas production from the shale revolution has reduced energy costs to the great benefit of consumers. Despite all the hoopla over renewables, natural gas and coal generate more than 60 percent of the nation’s electricity. Natural gas and oil are essential for home heating. Oil and gas are critically important for the production of petrochemicals and plastics. And oil meets more than 90 percent of our transportation needs. Our economic well-being therefore requires the United States to stick with its most important fuels – oil, natural gas and coal.
If anyone had bothered to check, it would have become exceedingly clear that the world needs more energy. The world’s population is increasing and people are seeking to raise their living standards. Development depends on energy. The alternative to development is stagnation and decay, conditions which create instability, poverty and harm to people everywhere.
At a global level, fossil fuels account for 83 percent of all energy consumed worldwide, and the U.S. Energy Information Administration forecasts that fossil fuels will still account for 77 percent of global energy consumption by 2040. Our economy and our energy security are dependent on production of these fuels. Those who suggest otherwise, such as the heralds of the divestment movement, are not only out of touch, they’re playing a dangerous game with the lives of real people.
Claims that renewables are ready to shoulder a significant share of our energy demand are simply undone by the data. While a promising and important part of our energy future, renewables remain a footnote in our energy mix. Wind and solar power combined meet just 3.2 percent of U.S. energy demand despite benefitting from years of lavish subsidies.
Energy policy must be guided by physical reality, not wishful thinking.
In spite of this, celebrities like Leonardo DiCaprio have joined de Blasio and the fringe of the environmental movement in calling for divestment. It’s just the type of campaign one would expect from people who don’t think twice about their energy bills and are more than willing to fly private jets to attend a climate rally.
The forces behind divestment – which exalt political polarization, cater to environmental ideologues, undermine economic structures and ignore the financial damage to working people – cannot be sustained. Divestment is leaving billions of dollars in investment at risk. Divestment has real costs, particularly for people who rely on returns from investment by removing a large and profitable sector of the U.S. economy from their portfolios. Divestment will hurt too many at the expense of the self-satisfaction of a few.
The divestment movement, and its anti-fossil fuel agenda, are exceedingly dangerous to consumers. Environmental progress is a worthy goal, but a radical agenda that sacrifices affordable, reliable energy in the name of climate extremism is outrageous. As temperatures slip again and arctic air descends on New York, let’s hope de Blasio’s constituents remember his rhetoric as they turn up the heat on their thermostats.
Matthew Kandrach is president of Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.
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