Opinion | Point: Dear Pitt, continue investing in fossil fuels

This column is part of a point-counterpoint series. Read the counterpoint here.

Walk into the first floor of Cathy, and you’ll see even less available seating than usual. For the past week, the Fossil Free Pitt Coalition has been occupying the building.

These protestors are pressuring the University to completely divest from fossil fuels in its $4.3 billion endowment, directly and indirectly, citing climate change as a chief concern. However, there are a number of other reasons why fossil fuel divestment should not be adopted by the University.

Research suggests that divestment decreases a university’s endowment over several years. This hurts students, since it would limit our educational options and likely raise tuition. Besides this, divestment on Pitt’s part would ultimately do nothing to combat fossil fuel demand — consumption is high because it’s the cheapest and most reliable energy option.

Even though 91% of student voters were in favor of divestment during a 2019 referendum, only 2,401 students out of 19,330 undergrad students voted. The administration should not prioritize the demands of a loud minority by divesting from fossil fuels — Pitt’s responsibility is ultimately to all of its students. This includes ensuring that they can afford a quality education — an opportunity divestment would likely hinder.

Divestment has been shown to decrease a University’s endowment over the long term, possibly leading to a rise in tuition rates and allowing Pitt less money to spend on future improvements and investments. Hendrik Bessembinder, a finance professor at the University of Arizona, studied the frictional costs of fossil fuel divestment, which include transaction costs and ongoing monitoring and active management costs. He concluded that all the costs to the university as a result of divestment would lead to a decrease in a university’s endowment ranging anywhere from 2-12%.

For Pitt, which has a medium-sized endowment, this could be anywhere from $86 million to $517 million.

Universities are meant to be a place where a host of ideas can all coexist and students can pursue their passions. By divesting, Pitt would be alienating a large amount of students who want to work or intern in the fossil fuel industry, which is very important in Pennsylvania’s economy, especially here in western Pennsylvania. It is estimated that 332,600 jobs are supported by fossil fuels in Pennsylvania and that the industry contributes tens of billions of dollars to our state’s economy.

Since these students are paying so much money to earn a degree, they deserve to attend a state-related school that will support them in entering an industry that offers many opportunities in the state. Pitt could also just as easily use the returns from fossil fuel investments to fund new scholarships or improve the University.

By selling all stock related to fossil fuels, it would not reduce the demand for fossil fuels that ultimately drives consumption around the world. Once the stocks are sold, other investors will come in and buy those stocks, since oil and gas stocks are a well-known investment option that can give decades of passive income due to high dividends. This ultimately makes divestment a pointless endeavor.

Clearly, the case for investing in fossil fuels is much stronger than divesting in it. There is no other energy source that can provide cheap and reliable energy like fossil fuels, and even though they are nonrenewable, new oil fields and gas reserves are discovered every year — we have more access than ever before.

In the past 20 years, fossil fuel use has skyrocketed. However, air quality, water quality and a host of other environmental and economic indicators have improved in countries that use fossil fuels the most. Fossil fuels have helped develop and fuel technology and machines that improve every part of our lives, such as air conditioning, modern transportation, improved agricultural yields and modern medicine. Fossil fuels also help lift people out of poverty in developing countries by providing sanitation and cheap electricity to millions who previously had no access to such supplies.

Fossil fuel companies also invest money into anti-pollution technology. Recently, Occidental, Chevron and BHP invested $68 million into Carbon Engineering, a company that has already developed a successful prototype that directly captures carbon dioxide from the air. The societal benefits we get from fossil fuels are high, and the negatives, such as pollution, can be greatly minimized with technologies such as this that are funded by fossil fuel companies. Carbon Engineering estimates that its first commercial plant will capture 1 million tons of carbon dioxide per year, which is equivalent to the work of 40 million trees, or the emissions of 250,000 cars, reducing the environmental impact of fossil fuels tremendously just from one plant.

Despite what some claim, there is no magical deadline in 2030 that will decide whether we all live or die from climate change. Many technologies like those of Carbon Engineering’s are already being developed to reduce the environmental impact from fossil fuels — Pitt should not take rash action in the name of climate change. Divestment is not a strategy that accomplishes anything beyond taking a radical stance on climate change. By and large, fossil fuels are what run the world economy. They are the cheapest and most reliable option for consumers and businesses alike and they support millions of jobs around the globe.

If Fossil Free Pitt really wants to prove that it’s against fossil fuels and all industries that benefit from them, then it should try to boycott them entirely. However, this would be impossible, because fossil fuels are so prevalent in today’s world and come with too many benefits.

As they fruitlessly protest fossil fuels in the comfort of Cathy, the rest of us can be perfectly secure supporting an investment strategy that includes fossil fuels.

Josh writes primarily about Jewish issues, domestic political issues and American foreign policy. Contact him at jab515@pitt.edu.