The problems and irony with tying pensions to oil


“There are plenty of ways in the modern life to encounter irony at its best including people socialising on websites whilst sitting at home on their own, or the richest people on the planet are also the biggest consumers of antidepressants, but the biggest irony of all time concerns everyone’s future and well-being.”

I shall explain.

The irony of tying pensions with oil.

It no longer makes sense to pay for pensions by investing in companies that make sure we won’t have a habitable planet to retire on.

One of the biggest legacies of the previous century, was of course the oil-based economy we all depend upon today and oil is so intertwined with our modern lives that it is also deeply entwined within our futures too.

I am talking about what may be one of the biggest ironies to befall modern man (and women). Many people don’t realise that their pension funds are reliant on us all burning more oil and gas, which in turn increases the likelihood of climate disaster in the near future.

Depending on how old you are when you read this article, the pension pot you spend most of your life contributing to, is actually contributing to the likelihood of agricultural failure, flooding and water shortages within our own lifetimes.

The irony of tying pensions to hydrocarbons has not gone unnoticed and people, institutions and companies who are beginning to wake up to this ‘shooting yourself in the foot’ scenario. Not only the climatic issues associated with burning every drop we can pull out of the ground, but the dependence on the continued cost of rising energy costs to make your pension perform, can only be described as just stupid.

Even if you are able to benefit from a nice pension fund further down the road, then what kind of a destination will this be as the parts per million edge towards 500 ppm and the agricultural problems that this will create, while most people will be unable to even heat their homes as energy will become a luxury not a necessity for millions.

This ‘double-edged sword’ scenario is now beginning to worry people around the world who now see fossil fuel dependence for pension security, as a dangerous and nonsensical way to invest.

Fossil fuel de-investment is now beginning to worry the fossil fuel industry as people around the world begin to see common sense. As one investor described it, the fossil fuel industries are too powerful, but the increasing number of de-investments going-on, by not only individuals, but by companies and institutions too, could leave the petroleum companies with at least black-eye.

This is important because these types of companies need a wake-up call from the ‘business as usual’ mantra which they still uphold, despite the obvious climatic, economic and social consequences. It’s these types of companies which should be developing the next-generation of technologies to prevent problems associated with not only global heating, but peak oil issues too.

As demand from rising populations begin to outstrip the ability to extract cheap oil supplies at cheap rates, we ask can the current decline in levels of new oil finds maintain the current level of output needed to maintain social stability? The answer worryingly is definitely not.

Much of what the petroleum industries are counting upon for future stock market success is either flawed through unrealistic future expectations which leave your pension at risk anyway.

For everyone new barrel of oil we discover, we now consume three, and oil production has already fallen in over sixty oil producing nations while the vast amount of what is still available will have to stay in the ground to prevent global heating and the associated agricultural problems.

The uncertainty of the petrochemical industry is fueling this new de-investment culture which will continue to gather pace as other people begin to see this pension predicament.

How de-investing could be the necessary change we are all looking for

As human beings we are often told it was our problem solving abilities which allowed our species to thrive through some of the toughest times and terrain in our history.

As governments and the petrochemical industry don’t seem to be able to tackle these great issues of our time, then it has been brought upon the common people to make the necessary changes to adapt. This is why solar panels and alternative energy technologies are growing in popularity worldwide and de-investment in oil companies is becoming an important step to less dependence.

This is similar to what happened twenty five years ago when, around the world institutions de-invested in companies doing business with apartheid South Africa. Change came very quickly in South Africa after that.

The fossil fuel industries should be turning themselves into alternative energy companies and take the hundreds of million dollars a day that these companies spend on finding new smaller and short-lived oil fields. This is why for now, we have to encourage de-invest in fossil fuel based stocks.

Investing in such companies is really a gamble that humans will never do anything about climate change even after the consequences become more apparent because if we ever tried to turn things around, then those stock values would plummet very quickly leaving your pension pot worthless at the worst or devalued at best.

It no longer makes sense to pay for one’s pension plan by investing in companies that make sure we won’t have a habitable planet to retire on.

Which side of this gamble are you betting on? If you knew the current oil companies were also developing the new-generation technologies needed, then wouldn’t that make them less of a gamble?

Currently they don’t, which makes them less invest-able and less likely to hold their value over the long-term. So another twist in the ironic story is that as much as it pains me to say, we need them to help solve these energy and climate crisis, but they also need us all to keep investing in them too.

The future is unwritten, but so is the future of your pension.



Author.

"Feel the pride."

Stuart Lovatt on
Founder of Heat My Home.


  • Tom

    Energy is the biggest challenge that we face as humans. Oil is just one of the energy sources. The even larger problem is over population though. You mention “irony”. Economists of every sort all appear to ask for constant growth. Growth means more consumption of everything including energy and I am sure that economists love to see population growth because it stimulates growth in general. We are actually driving ourselves into our own demise. As a mass, we humans do not appear to be terribly intelligent creatures!