Martin_B wrote: ↑
Mon Jul 31, 2023 12:53 pm
So you're concerned that the massive oil and gas companies will be wasting money? Bless.
As long as oil and gas companies can finance new extraction capacity and make a profit from it, they will - they're companies.
I think it's fairly widely agreed that in order to avoid disastrous climate change, we need to pretty much stop extracting oil and gas quite soon - as I understand it, sooner than the expected operating lifetime of new oil and gas projects.
This kind of implies that either new oil and gas extraction projects deliver their promised return on investment and we get disastrous climate change, or that current oil and gas extraction will have to be made impossible or uneconomic by legislation or regulation so that we can avoid disastrous climate change. I can't say I'm tremendously optimistic for the latter but if people can pull together any sense then it is what will have to happen. Hence the prospect that oil and gas assets may become stranded, under that definition.
The companies themselves are acting logically enough in that if they can continue to raise finance for doing stuff that is profitable on their investors' timescales then they will carry on doing so. After all the worst that can happen to any individual if the bet doesn't pay off is that the company goes bust and they lose their job and any personal shareholding becomes worthless, but if their personal risk perception doesn't make that seem terribly likely - or they plan to retire and cash the shares in before then - then they'll probably be happy to carry on for now.
I think the real target of the 'stranded asset' messaging is the banks, pension funds and other investors in oil and gas companies whose institutional inertia has stopped them reevaluating the risk of oil and gas investments based on the dilemma above. Sustainable finance is slowly becoming a thing, but it is a bit like, er, turning an oil tanker around. It's why I'm no longer an oil company shareholder, anyway (at least directly).