As I learned from this article by Sarah Murphy at the Motley Fool, Al Gore has recently joined the chorus of people getting the “carbon bubble” story wrong. Thanks to this tweet by ekopolitan for the link.
The wrong theory Gore now shares is: Since only one third of fossil fuel reserves valued at $7 trillion can be burned, most of these assets will need to be written off some time in the future. That, in turn makes it a long-term risk to invest in fossil fuel companies. Gore compares them to the “subprime” investments that caused the last financial crisis.
So why do I think this is wrong?
Actually, I agree with the premise. Global warming is dangerous. Eventually people will wake up and it will become illegal to burn the stuff. And most consumers will think of gasoline cars quite correctly ay s “stinking gasoline cars”, the mere thought of riding them making them want to vomit, like Princess Angel from the 24th Century in part 05 of my global warming science fiction novel “Last Week”. I just posted that part, by the way. Feel free to read it and find out about how someone from the future thinks about burning fossil fuel.
However, if you leave two thirds of the treasure in the ground, what would that do to the price of the remaining third?
Might that go up??
Would it go up by a factor of over three, which would be enough to cancel out the reduction in volume and leave the fossil fuel companies still with a higher valuation of their assets?
And what about non-fuel use of fossil fuels?
I still have to see anyone proposing the “carbon bubble” theory to even address these simple questions. Much less have I seen an answer that sounds convincing.
If Jeremy Leggett is right, we will see much higher oil prices because of peak oil in the immediate future anyway. Those assets will be worth much more in the future before the first oil field is declared off limits for climate change reasons.
And Al Gore wants me to believe oil fields will be worth less in the future?
I think that bet is about as smart as betting on Bitcoin prices falling strongly over the next decade.