World Bank to Cease Oil/Gas Investment After 2019

[TheTalkingMule]

This is going to crash the entire global economy. Run for your lives.

World Bank Group Announcements at One Planet Summit

 

[jhm]

Developing countries need to avoid asset stranding. This policy can help in two way, avoid new assets that will be stranded and preserve higher fuel prices to preserve the value of existing assets.

Of course, other investors may step in where the World Bank steps out.

 

[neroden]

Awesome. This like many other things is mostly a signal -- not much upstream oil and gas was funded by the World Bank in the first place -- but it's essentially warning other investors that they won't get a World Bank bailout.

 

[TheTalkingMule]

But at what point does this kind of signalling coupled with rising rates completely cut off investment? Can the world economy handle a precipitous plunge in oil reserve valuation similar in speed and sharpness to coal's demise?

In my mind, the only thing that could slow the rippling economic effects would be a globally coordinated effort to more rapidly transition to renewables. Do we really think that kind of coordination will happen? After all, we're only at the very beginning of this whole Brexit/Trump/Nationalism trend. Income and wealth inequality haven't bottomed, they're accelerating.

 

[nwdiver]

I watched Deepwater Horizon the other day. The other great thing would be if insurance companies refused to issue policies like they have for nuclear plants. Of course the next step would be a Price-Anderson doppelgänger for the fools fuel industry

 

[neroden]

But at what point does this kind of signalling coupled with rising rates completely cut off investment?

Not soon enough?

Can the world economy handle a precipitous plunge in oil reserve valuation similar in speed and sharpness to coal's demise?

Personally, I think so, but I welcome arguments to the contrary.

Now, states which are heavily dependent on oil revenues for their government budget will *not* survive this, but I don't see why it would hurt... say... Argentina or Vietnam, or even China or the US. Oil consumer countries should actually benefit in the short run...

In my mind, the only thing that could slow the rippling economic effects would be a globally coordinated effort to more rapidly transition to renewables.

I agree. But I think the market is doing the coordination.

Do we really think that kind of coordination will happen?

Not intentionally, but actually, yeah, I do.

After all, we're only at the very beginning of this whole Brexit/Trump/Nationalism trend. Income and wealth inequality haven't bottomed, they're accelerating.

Unfortunately I don't think that's going to change; the roulette-wheel winner-take-all character of capitalism remains intact, and unless countries eventually implement wealth redistribution from the top to the bottom, it ends up wrecking capitalism.

HOWEVER, at the moment, the winners in the roulette wheel look they're going to be people like Musk, while the old-style oil-reserves barons have bet on the wrong number.

The great energy transition is going to create a lot of economic dislocation, but also a lot of economic activity. People in oil-related businesses will lose their jobs (as did those in coal-related businesses), but solar-related, battery-related, electric-vehicle-related businesses will be hiring more and more and more people, and that's going to keep the economy humming for quite a while, until there's solar on every rooftop, a battery in every building, and all the vehicles are electric. (At that point, when the transition is over, there's a problem.)

 

[Joel Weber]

Is it a problem, though, if we've implemented Universal Basic Income by then?