Take us through this. You should a choice between return on
the one hand and social values on the other.
Because that's the way some people like to put the question.
You are absolutely right. And I have to tell you, I don't
necessarily like the word ESG. Just to put that on the table right
here. But I think what is happening right now
in Washington, President Biden did that, vetoed the bill that was trying to pass
through to allow corporate pension plants to consider ESG factors in their
investments, not to ISE necessarily adopt them, but to actually consider
them. So it was a pretty soft requirement.
I think that's what that is not showing us, is what you said, which is right
now, if we you and I were investing in, let's say, renewable energy, we would
have lost this year just in 2023, one point four percent or so.
Of course, today the markets got pretty murky.
But but if you had invested in oil and gas, we would have lost three point
eight percent in the last five years. We would have made seventeen point four
percent in renewable energy and we would have made about 7 to 10 percent
depending on which index you're looking at in oil and gas.
Now, if you looked at other periods, oil and gas might very well be ahead.
But what does that mean? It means for investors.
Renewable energy is really economic. It has now changed the technologies with
us such that clean energy happens to be economic.
So when you're looking at purely financial decisions, it should certainly
be a part of your portfolio. So I wonder if I could put it this way.
How much of that's on the fundamentals is that you can actually make more money
by taking environmental. I'll just take an environmental go.
I won't bother with. Yes, OK.
And how much is it? Actually, just the hydraulic pressure
behind environmental investing. It's so popular that money goes there
and it drives it up rather than actually being in the fundamentals.
So just purely on the fundamentals. Just purely on the cost of how much it
costs now to produce solar energy, if you look at that, it has become totally
fundamentally economic. If you look at Texas, because we see
Texas and Florida are right in the front of the conversation that you mentioned.
But Texas is producing 14 percent of renewable energy in America.
Do you think, you know, that would be the case if the fundamentals were not
there, there just as we speak. Building a huge win for wind farm that
will produce energy for 3 million households just because it is cheaper
than the existing oil and gas. So what you have, let's say, in Texas is
the oil and gas community is continuing to produce oil and gas because you need
that for the transition. But they are also moving into putting
more of their money into wind energy and solar energy.
I say you've been in the markets for a good long time.
You reserves all sorts of different positions.
Well, the market sort this out. That is to say, if you're right and in
fact, you'll get better returns on average over time by taking into account
environmental concerns, will that drive people into those investments, whether
they want to be there or not? I actually think people are moving in
that direction so that there is one thing is the political conversations
that are going on. But if you look if you talk to any
business man, again, not just in Texas, but all over the country, people are
investing in an integrated way into into these sources of energy.
And and they'll continue. And insurance companies, by the way, are
looking at the same factors to make sure they don't lose money.
It's very much it's it's hot. The job is how to maximize returns.
How do you minimize risk? Both of those are very important for
investors. So as I'll just again say, what is
climate rather than social and governance for the oil?
It hasn't gotten a bad name because some people are using it as a marketing
technique. It's actually hard to know which
companies are actually making decisions based on it as opposed just saying that
because everyone's to say they're environmentally correct.
I think you're absolutely right. There's the greenwashing that green
bonds led to some companies that were even using coal, calling themselves
green. So climate has become not such a
positive word, just like ESG. But if we just talked about energy
transition, I don't think many people would disagree.
We need to use oil and gas mostly by using them in the transition, but we're
moving towards cheaper, sustainable energy.
I think everyone is doing that, that you're looking at Saudi Arabia, UAE or
Texas. Let's go international just for a
moment. Actually, we talked today with the U.S.
nominee to head the World Bank. Yes, Jay Bulger, you know him well.
Very good friend and great inspired choice.
And I wonder, though, is the United States and Western European countries
insisting on some of the poorest nations, the world, to go entirely to
zero emissions, all not no fossil fuels, when, in fact that's not happening in
the United States is not having Western Europe.
There is a transition, as you're talking about.
So if you talk to the minister of energy in a place like Nigeria or Indonesia,
they would say maybe it's being a little hypocritical that we're all using in
Europe and in the U.S. coal and oil and gas and.
Them not to invest in their natural gas industry to replace
imported coal. And I think you need
and you need the hydrocarbons in this countries during the transition.
At the same time, solar and wind is equally cheap.
So if I was in their shoes, I would be exporting my gas over to Europe and
using my solar. Is Rock Creek getting an advantage by
using history? Oh, I would say not an advantage, but we
are making some of our best investments. Investing in fuel aviation as we speak,
looking at new fuels in for some of the biggest airlines in the country.
We are looking at the energy storage. We're looking at carbon capture and
charging. And those are some of the best
investments you could be making.