The  price of Brent crude has fallen below its lowest level  in the recession that followed the Credit Crunch while the FSTE 350 Oil and Gas producers share Index has fallen about 25% in a year. These trends are already  having a serious impact on the  fossil fuel (and other extractive)  industries,  making investment in them increasingly risky.

Brent Crude price graph

The risk is  compounded because “shifts in market sentiment induced by awareness of …climate risks could lead to economic shocks and losses of up to 45% ..on equity investment portfolios… [while much of these losses are unhedgeable]” (see recent report). The already shaky economic system may be close to collapse.

 Naomi Klein has pointed out three implications of this situation for the climate movement:

  1. Low oil and gas prices reduce the consumer impact of measures such as Cap & Dividend and carbon price mechanisms  that increase the cost of fossil fuels. This makes the present a good time to introduce these measures.
  2. The increasing riskiness of fossil fuel investments provides a strong financial argument for divesting and  re-investing  in renewables,  energy conservation and energy storage.
  3. It’s a good time to divest as it’s hitting the producers when they are down.

FTSE Oil & Gas shares 2015

A final (Kleinian!?)  point: The global interactive eco- and financial  system is unstable and threatened with collapse.  CapGlobal Carbon’s Cap & Dividend  and  Divestment/Reinvestment could help to facilitate a transition to a stable , equitable, and less extractive future.

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