Obama? BP? What’s the real threat to our pensions?
Posted by Colin Butfield on 14/06/10 00:00 AM
Is President Obama’s language really the biggest threat to UK pension holders? I don’t think so…
It’s funny how a media story shifts over a couple of weeks. First BP were the bad guys over the oil spill in the gulf of Mexico. Then we see President Obama being asked to leave BP alone because of risks to British pensions.
Amid accusations of national self-interest and blame-shifting, would our pensions suddenly be safer if Obama just altered his rhetoric? Sadly not.
UK pensions rely heavily on oil companies – on dividends from shares in companies like BP and Shell and on the long-term value of oil company shares. Pension fund managers look for long-term investments that will provide reliable, sustainable returns. But there’s a problem with oil.
As the cheap and easy-to-access oil runs out, oil companies have had to resort to finding more expensive, risky, and environmentally sensitive oil to feed the world’s fossil fuel addiction. Deepwater drilling (as in the gulf of Mexico spill) is one example, but extracting oil from highly polluting tar sands in Canada, and plans for drilling in the vulnerable Arctic, are part of the same shift.
These activities can bring unacceptable environmental risks. Not just to local species and biodiversity – freshwater systems in Alberta, bowhead whales in the Arctic, or salmon spawning habitats in the far east of Russia. They also cause a rise in carbon emissions, which increases global warming and takes us closer to runaway climate change.
And as investments they’re riskier too. The real and inevitable costs of current and future oil exploitation – cleaning up oil spills, carbon capture facilities, freshwater recycling, managing environmental impacts in sensitive regions (the list goes on) – have so far been concealed from investors, including pension holders like you and me.
As long as our pension companies aren’t looking for, or can’t find out about, the risks associated with their investments in oil and gas projects, British pensions will be seriously at risk over the coming years. Regardless of what Obama says about BP right now.
If all the newspapers and politicians who’ve expressed concern about the risks to British pensions really want to do something about it, here’s how they can help:
• call for oil companies to disclose the risks they’re taking with pension holders’ cash
• make them report carbon emissions and other environmental factors of their current and planned operations.
Our use of oil won’t end overnight, but taking bigger and bigger risks to find more oil, and release more carbon dioxide, isn’t the answer either. If we all know the real threats, we can encourage our pension companies to move out of risky, environmentally damaging investments and into the low-carbon energy production we urgently need.
You can...
Follow our campaign to halt Canadian tar sands – toxic fuels
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