Oil companies rank high on ESG metrics because they don't actually burn the petroleum oil that they extract. It's that simple. Maybe politics got people confused but it's the reality of facts. If you remove the politics from the equation as S&P, Moody, Fitch are required to do, then there is not much to discuss. It's simple physics.
If the oil is easily accessible such as the oil extracted by Aramco in Saudi Arabia or Bahrain (where you have to essentially just stick a straw in the sand and oil comes out), it's no wonder that the amount of emission to complete the process is far less than an energy intensive operation such as manufacturing an electric tank such as the Cyphertruck or to a lesser extent the Model Y.
> Oil companies rank high on ESG metrics because they don't actually burn the petroleum oil that they extract.
Seems to just make ESG look ridiculous.
Drug cartels rank high on my "Community Benefit Metric" because they provide jobs for the community and only do what they must to manufacture and sell drugs /s
Who decided that oil should be accounted for when it's burned and not when it's extracted? That is a choice, and it is a choice that benefit some people over others, and it's not a choice that most people would agree with.
Because oil in a supertanker or a underground tank doesn't harm the environment. It's when oil is burned to produce energy + heat + quality of life + CO2 that the harm happens, in the form of the aforementioned CO2
There is nothing to agree or disagree... it's simple physics. If we want to politicize physics then we can go forward and politicize physics too. But at least we should be conscious about it.
So do we think ESG scores get transitively priced in, the way carbon pricing should work?
Like, if you make it harder for those who burn oil to raise capital, does that mean that there are fewer customers for the people who extract it? Does it hurt their profits?
Is this all passed on, magically, by the Efficient Market?
1) So news dropped today which was a big red day across the board to begin with. So if we want to quantify let's ballpark the ESG drop news in a -1B marketcap? I remind you Tesla is (amazingly) a 750B company. If they think that a -1B on hugely red day can make it harder for them to raise capital, then they are better off closing shop on all their Gigafactories because evidently there is no point in continuing the enterprise
2) Yes, it's exactly like that, punishing those who burn oil hurts those who mine oil, if it doesn't it only means that those who burn oil found a way to hide from ESG rating by becoming a private company and getting financed elsewhere eg. via private equity or using old fashioned bank loans and credit lines, or even by convincing clients to pay in advance or with less delay.
Actions and desires have consequences, the passion that people have for climate change has consequences, when you wanna get to zero you don't get to skip anything and even companies which people are emotionally attached to (such as Tesla) have to comply.
