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DIVESTMENT — VILLAGE CASTS OUT FOSSIL FUEL STOCKS

VILLAGE CASTS OUT

FOSSIL FUEL STOCKS

The Freeman’s Journal, Oct. 27, 2016

Editor’s Note: The Cooperstown Village Board unanimously voted Oct. 24, 2016, to divest fossil-fuel stocks in its fire and police department pension funds, setting off a debate between Trustee Lou Allstadt, the retired Mobil executive vice president, and David Russell, a lawyer, banker and former assistant counsel for pensions in the state Comptroller’s Office.  This is the first news report on the issue.

By JIM KEVLIN

divestment-page-1-oct-27-2016COOPERSTOWN – It is certainly a first in New York State, experts say, perhaps even in the nation.

The Village Board voted unanimously Monday, Oct. 24, to divest fossil-fuel stocks from an S&P 500 portfolio in favor of an S&P alternative of 475 stocks.  The smaller index – its symbol is SPYX – contains no fossil-fuel producers.

At first, contacts at Elected Officials to Protect New York and 350.org, two organizations formed to lobby municipalities to divest, noted that dozens of communities in the U.S., the first being Ithaca, have “committed” to divest and are encouraging the State of New York to do so.

But it turned out committing hasn’t equaled doing so.   ”After looking more closely at the commitment, it appears that this will technically be the first full fossil-fuel divestment (from coal, oil AND gas) from a public pension in the nation,” Lindsay Meiman, U.S. communications coordinator for 350.org, said Tuesday, Oct. 25.

Village Trustee Lou Allstadt, the retired Mobil executive vice president who has been leading village efforts to move away from fossil fuels, said $140,000 from the defined-benefit retirement plan for Cooperstown volunteer firefighters and emergency responders was invested in the S&P 500.

As a result of Monday’s vote, the money  will be shifted in quarters every three months for the next year.

Allstadt said this pension fund totals about $900,000, and the village has other money in the stock market.  “There are certainly fossil fuels in those categories … If we see something similar to the ‘X-fossil’ index, we’ll look at that, do our due diligence, and decide.”

The decision was not without some controversy, as it was made over the advice of Village Treasurer Derek Bloomfield, who – citing guidelines for CFAs (chartered financial analysts) – advised them that a fully diversified portfolio, including fossil-fuel stocks, is the most stable.

“Social investment should be done with one’s own money,” he added.

Historically, Bloomfield continued – and he underscored this was just his opinion – fossil fuels have done more to raise mankind out of poverty than any other development through the ages.

That caused Allstadt to shoot back, “I totally disagree with the statement that fossil fuels have been a boon to humanity.  They’ve created a great threat to humanity.”

Eventually, he predicted, fossil-fuel stocks will drop, and the village should get ahead of the curve.

Trustee Ellen Tillapaugh Kuch seconded Allstadt’s motion, and the rest of the trustees and Mayor Jeff Katz voted aye.

Ironically, the trustees then accepted a sales tax report from Trustee Kuch showing July revenues up 27 percent over the year before, largely due to more fans buying gasoline, it was noted, to get back and forth from the record-breaking Griffey Jr.-Piazza induction.

In an interview the next day, Allstadt pointed out that, among others, Mark Carney, Bank of England president, warned Lloyd’s of London in September 2015 that trouble is coming in the fossil-fuel sector.
Personally, Allstadt said, he has divested fossil-fuel stocks with the help of a financial planner used by many former senior executives in Mobil and Exxon Mobil and feels comfortable doing so.

“In my 40-years plus following this, while working and in retirement, I’ve never seen a period with a convergence of so many negative factors for the industry,” he said.  “This is not just a typical down cycle. It’s the beginning of a paradigm shift.”

This is a logical outgrowth, and Bloomfield, a visiting professor of finance at Hartwick College who joined Village Hall less than a year ago, had been brought into the loop on the fossil-fuel resolution, most recently at a Finance Committee meeting last week, and again Monday, when Mayor Jeff Katz asked him to express his views.

“He was uncomfortable with it.  We understand he was uncomfortable with it,” said Allstadt.  But he pointed out that Bloomfield is an employee, and it was a board decision.  “That’s the time when everybody has to suck it up.”

“When you have concerns about a certain industry, it doesn’t make sense to hang on,” Allstadt said.  “You just don’t keep driving your car when you see a cliff ahead.”

Life Without Fossil Fuels? Careful What You Wish For

Life Without Fossil Fuels?

Careful What You Wish For

Editor’s Note: Mike Zagata, Ph.D., who lives in Davenport, is a former commissioner of the state Department of Environmental Conservation. This is reprinted from this week’s Free

By MIKE ZAGATA

Mike Zagata
Mike Zagata

There is virtual agreement that we must move away from fossil fuels to energy sources that are renewable.

First, fossil fuels are non-renewable, i.e. at some point we will run out of them. Second, there are scientists and politicians that believe the burning of fossil fuels contributes to climate change.

No matter which reason one chooses to support, there is a legitimate need to begin now to seek energy sources that are renewable and increasingly more environmentally friendly. We’re already beginning to see some promising alternatives such as uranium mining, but it is also important to recognize early on that there is no such thing as a “free lunch” when it comes to energy. Each alternate we seek, be it solar, hydro-power, tidal power, wind power, etc., will have environmental impacts.

For example, with wind power there is an issue with the impact of the vanes on birds. With hydro-power there are fisheries impacts like the declines of Western salmon runs. In the long run, it will become a matter of trade-offs and political will.

There are those who argue we should cease producing and burning fossil fuels right now. There are others who favor using them as a bridge to provide our energy until we have feasible alternatives. A mere year ago there were people who argued that the problem would take care of itself as fossil fuels would price themselves out of the market. As we now know, just the opposite has happened and gas is now less than $2 at the pump.

Let’s take an honest look at what life in the US would be like if the government banned the use of fossil fuels tomorrow.

Those fortunate enough to be able to afford to install solar panels on their roof or in their yard would appear to have an advantage over the rest of us. Is that really the case? They might well have enough electricity to heat or cool their home during the daylight hours. However, solar panels don’t generate electricity at night. What would happen then? They would be like the rest of us and freeze during winter and swelter during summer.

If they drove their electric car to work expecting to recharge it overnight guess what – they’re out of luck. You see that wall outlet or fancy recharging station formerly got its electricity from a coal-fired plant. Coal is a fossil fuel and thus can no longer be burned to generate electricity. If they’re going to recharge their electric vehicles, it will have to be done at work if they have enough of a charge to get there.

Those of us who awaken to the aroma of bacon and eggs would need to awaken much earlier to stoke up the wood stove (wood consists of the same ingredients as coal, but it’s not yet “fossilized” so it might be legal to burn). Our gas stove or electric stove that gets its electricity from generating plants that burn coal or gas (God forbid we use nuclear energy!) would no longer have a fuel source as fossil fuels are banned.

Wood stoves emit particulates that, when conditions are right, may cause inversions where polluted air is trapped near the ground and people are forced to breathe it. That’s not good for people with emphysema or other lung issues. Air quality in Denver, Colo., got so bad as a result of wood-burning stoves, that the city banned their use during certain weather patterns. Having to cut our own wood might provide an unexpected health benefit as we would likely become more fit. Cutting more trees might even benefit certain songbirds that rely on openings in the forest for food.

For those of us who like to drive to meetings so we can plan our strategy for protesting something, we would be in for a shock. As previously discussed, electric vehicles would likely be home-bound. Our cars and trucks definitely would be. Gasoline is a fossil fuel; burning it would be banned. Not only would our freedom to travel via the car be restricted – so would our ability to travel via the airplane as jet-fuel is also derived from fossil fuel. There went those mid-winter breaks to Florida. What about overnight mail via FedEx or UPS? The Post Office would need to revert back to the pony express.

Even if we could burn the gas, diesel or jet fuel, we wouldn’t have a car, truck or plane to burn it in. Cars and trucks are mostly steel and plastic and, you guessed it, natural gas is used in the manufacture of steel and petroleum products are used to make plastic. Airplanes are mostly aluminum and manufacturing aluminum is very energy intensive. Even more surprising is that petroleum is used to make synthetic rubber and 70 percent of our rubber today is synthetic. It takes about seven gallons of petroleum to make one typical tire. What happens when we run out of the existing stock of tires if fossil fuels are banned?

Our clothing would also undergo a dramatic change. Synthetic fibers are petroleum based. Cotton fields and sheep would again dot the countryside as we would be forced to use “natural” fibers like cotton and wool. Packaging, as we know it today, would be a thing of the past.

Instead of bacon and eggs we could eat cereal – or could we? Petroleum is a key ingredient in fertilizer and pesticides/herbicides. Instead of going to the local grocery store, we would be maintaining our own garden and that can be labor intensive – especially without a way to control pests. The examples are real – just as the need to continue using fossil fuel as a bridge to the future is real. Please take a minute and reflect on all the things you use every day that require fossil fuels. Without them our lifestyle would undergo a dramatic change for the worse. With them we have a window of opportunity to find alternatives that will both enable us to maintain our lifestyle and protect the quality of our environment.

Life Without Fossil Fuels? Where Would We Start?

COLUMN

VIEW FROM WEST DAVENPORT

Life Without Fossil Fuels?

Where Would We Start?

Do you really want to stop using fossil fuels?  Your immediate answer may be a resounding “yes.”  However, that could change your life in a way you hadn’t anticipated.  That’s because so many of us grew up in cities and have no real tie to the land or to how the things we rely upon in our daily lives come from or how they are made.

Do eggs, tomatoes and bacon come from the grocery store?  That may be where you purchase them, but that’s not where they originate.  They are grown on farms, often located thousands of miles from the store where you purchased them.  When you purchase a tomato during the winter, it likely was grown in California.  The eggs you buy likely were hatched by chickens residing in huge poultry farms in the South that were fed with grains from the Midwest.  The bacon probably came from hogs grown in Iowa.

What Are Fossil Fuels?What Are Renewables?

COLUMN

What Are Fossil Fuels?

What Are Renewables?

By MIKE ZAGATA • for Hometown Oneonta & The Freeman’s Journal

Based upon what I read in our papers, there seems to be a lack of information and/or understanding about fossil fuels and the so-called “renewables.”  This might be a good time to attempt to get all of us on the same page.

The descriptive term “fossil fuels” includes coal, oil and natural gas – the energy sources that were formed millions of years ago as sedimentary deposits in lakes and oceans.  They represent plant and animal material that settled to the bottom of those water bodies and were, over millions of years, subjected to pressure.  As a result, they were transformed into coal (hard coal or anthracite and soft coal or bituminous), oil and natural gas.  Because they took millions of years to form, they are considered to be non-renewable – some day we will run out of them.

FOSSIL FUELS: Stanford Says, Recapture CO2

COLUMN

FOSSIL FUELS: Stanford Says, Recapture CO2

Editor’s Note: This is the first of occasional articles, from university public-relations departments, on
research into burning fossil fuels more cleanly. Here, Stanford University tells how faculty there are targeting “super-emitters.”

In the United States, most electricity from the grid comes from power plants that run on coal or natural gas. These plants generate 35 percent of all carbon dioxide emissions in the United States.

Climate scientists say we need to reduce global emissions by about 4 percent a year, going to zero emissions, or even negative emissions, before the end of the century. But emissions-free technologies like wind, solar and nuclear may not be able to address the problem quickly enough.

In developing economies, the demand for cheap and reliable electricity from fossil fuels continues to grow, generating even more greenhouse gases that contribute to climate change. But from an environmental standpoint, not all fossil fuels are created equal.

Natural gas is primarily methane. When burned, methane emits about half as much CO2 as a coal. In the last 10 years, the United States has seen a boom in the production of low-cost natural gas, which many electrical utilities are adopting as a cleaner alternative to coal.

Stanford researchers are exploring novel ways of satisfying our current energy needs with greener technologies for burning fossil fuels.

But one drawback of natural gas is the leakage of uncombusted methane, a far more potent greenhouse gas than CO2. Stanford faculty members Rob Jackson and Adam Brandt in the School of Earth, Energy & Environmental Sciences have been identifying the wells and pipes where those leaks are most likely to occur so that industry can prevent them. They’ve found that a small number of wells produce most of the leaked methane.

To better understand the benefits and risks of increasing natural gas production, the Precourt Institute and the School of Earth created the Natural Gas Initiative (NGI), a campus-wide research program launched in 2015.

One key area of NGI research focuses on unconventional gas reservoirs and how they can be better managed to increase the gas-recovery rate, now well below 20 percent, said NGI Director Mark Zoback. By increasing recovery, gas production can be maintained with fewer land-use impacts, he added.

Beyond switching from coal to natural gas, another approach for reducing emissions from fossil fuels
is to capture the carbon dioxide and store it underground in deep geological formations, a technique known as carbon capture and sequestration.

With support from the Global Climate & Energy Project (GCEP), Lynn Orr, Sally Benson and other Stanford faculty members helped establish the scientific basis for safe and effective sequestration, including monitoring techniques demonstrating that captured CO2 is permanently trapped underground.

Hamdi Tchelepi, a professor of energy resources engineering, uses supercomputers to study how injected CO2 gas interacts with rock and fluids underground. In addition to permanently sequestering CO2, Stanford faculty explore using the gas for sustainable purposes, like making renewable plastic.

Allstadt Lectures On Fossil Fuels Vs. Renewables At SUNY

Allstadt Lectures At SUNY:

Shift To Renewable Energy

Retired Mobil executive vice president Lou Allstadt, now a fossil-fuels foe and Cooperstown village trustee, addresses a SUNY Oneonta this afternoon during “Green Dragon Week” on the need to shift to renewable energies. Through production, transmission and final use, 60 percent of the energy in fossil fuels dissipates, he said.  Easily accessible fossil-fuel reserves are dwindling, he said, and the U.S. should follow the examples of China and India, which are accelerating the shift to more more environmentally friendly wind and solar power. (Ian Austin/AllOTSEGO.com)
Local Activists Join Foes Of Fossil Fuels

ACTOR JAMES CROMWELL SPEAKS

Local Activists Join

Foes Of Fossil Fuels

Local anti-fossil-fuel advocates Bob Eklund of New Lisbon and Suzy Winkler, Burlington Flats, were among founding members of United Against Fossil Fuels (UAFF), which announced its agenda on the "Million Dollar Staircase" inside the State Capitol in Albany at noon today.  Actor James Cromwell, who has appeared on such TV shows as West Wing and movies like "The Longest Yard," where he played the Warden Hazen.  UAFF, newly formed, is a statewid
Local anti-fossil-fuel advocates Bob Eklund of New Lisbon and Suzy Winkler, Burlington Flats, were among founding members of United Against Fossil Fuels (UAFF), which announced its agenda on the “Million Dollar Staircase” inside the state Capitol in Albany at noon today.  Here, actor James Cromwell, who has appeared on such TV shows as West Wing and movies like “The Longest Yard,” where he played the Warden Hazen, leads UAFF members in a chant, “We are not drowning.  We are fighting.”  Winkler is halfway up the steps on the right.   (Sam Aldridge/AllOTSEGO.com)
DETAILS IN HOMETOWN ONEONTA, FREEMAN’ S JOURNAL
AVAILABLE ON NEWSSTANDS TOMMOROW AFTERNOON
Are Fossil Fuels Part Of Climate-Change Answer?

EDITORIAL

Are Fossil Fuels Part

Of Climate-Change Answer

Some of you may have heard our Adirondack neighbor Bill McKibben’s NPR interview a year or two ago.

Unless all buildings in the U.S. are made energy-efficient by 2030, the war against Global Warming will be lost, he said.

The interviewer asked, is that possible? No, said McKibben, who is among the nation’s foremost
advocates of stemming greenhouse gases. In different words, McKibben is saying, we’re lost.

Too much of the discussion of the future of the earth is fear-filled and hope-less.

In reality, much research is underway not just toward creating a sustainable future, but into cleanly burning fossil fuels.

If that’s possible, we would preserve a huge investment in infrastructure that today provides 81 percent of the nation’s energy needs, and it’s portable and convenient.

Living here in Otsego County, we forget the scale of the energy challenge. But visit New York, Chicago or Miami – it’s a big, energy-guzzling world out there, friends.

Still, with fracking, the U.S. has achieved energy independence in the past decade for the first time since the end of World War II. This is desirable, but, of course, not if it destroys us.


Perhaps it doesn’t have to. So today, at the bottom of this page, we begin an occasional series, “Can Fossil Fuels Save Us?”, with a report from Stanford University of what its scientists are doing to emeliorate greenhouse effects.

Many similarly credible reports are available from research universities across the country, and the series will tap into them. And this newspaper has many credible readers that assess these inputs independently, and provide a counterbalance if necessary.

All but a tiny fringe of our fellow citizens accepts that Climate Change is real. That debate’s over. The focus is shifting to how much, how soon, and amelioration.

With Governor Cuomo proposing a $33 billion five-year green energy plan (despite the $6 billion budget), with the Otsego County Energy Task Force planning our local energy future, and with four-mile-square solar farm proposed at West Laurens (and many more to come), is it likely that renewables alone don’t need to be the whole solution?

Travel with us. Let’s not succumb to McKibben’s despair.

DIVESTMENT – Base Pension-Fund Decisions On Unbiased, Impartial Expertise

Base Pension-Fund Decisions

On Unbiased, Impartial Expertise

Op-Ed by DAVID RUSSELL

The Freeman’s Journal • Nov. 4, 2016

Editor’s Note: David Russell, a Cooperstown resident, was formerly assistant counsel for state Comptroller H, Carl McCall, the sole trustee of the state’s Common Retirement Fund, and has been a long-time manager of alternative investment programs, including social “impact” programs, for public pension plans, endowments and foundations.

tfj-page-a04-nov-4-2016It is not clear, at least to this writer, the totality of research data or investment/legal advice the trustees received or reviewed in arriving at this decision; as a result, the following discussion is almost exclusively based on the information provided in this newspaper subsequent to the Oct. 24 meeting.  Further, the following discussion is not meant in any way to diminish the hard and honest work the village trustees perform on a week-in and week-out basis.t the Cooperstown village trustees meeting Monday, Oct. 24, the trustees unanimously voted to divest fossil fuel stocks from the $140,000 equity investment of the defined benefit retirement plan for village firefighters and emergency responders (the pension fund).  Although this pension totals $900,000, it is likely that the majority of the remaining $760,000 of investments are held in shorter-term securities such as bonds and other fixed income investments largely unrelated to fossil fuel companies.

The village trustees, when making decisions on behalf of the pension fund, are not merely acting as elected officials in a representative local government where the voters can vote the trustees out in the next election if they don’t like the political or policy positions the trustees take.  Rather, when acting as trustees of a defined benefit retirement plan, the trustees, in the same manner as the state Common Retirement Fund and the New York City pension funds, are subject to strict fiduciary duties.  Those fiduciary duties are twofold:

  • The trustees need to perform their duties with the care, skill, prudence and diligence that a “prudent person” acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, and
  • The trustees must act solely in the interests of the members of the retirement plan (Regulation 85. state Insurance Department).

Put in layman’s terms, when making investment decisions the trustees must act in a manner consistent with how a prudent trustee of other pension funds, especially smaller ones, would conduct themselves.  That includes reviewing the amount of research and unbiased analysis an impartial trustee would review in arriving at

Please See RUSSELL, A6

his/her decision, and if the trustee does not have the skill to make a certain financial decision, to rely on the advice of an expert.  In addition, the trustees must act solely in the best interests of the beneficiaries – in this case the firefighters and emergency responders.  This means the trustees are to be focused on the best risk-adjusted returns available to the pension fund, free from any conflicts of interest or political beliefs/statements.

When interpreting the above fiduciary requirements, many New York pension funds, including the state Common Retirement Fund, look to ERISA  (the federal statute applicable to private pension funds) for guidance.  More specifically to the issue at hand here, the federal Department of Labor (which enforces ERISA) has stated in Interpretive Bulletin 2008-1 that in the case of social divestment, the plan fiduciaries have the burden of showing that the money is diverted from a socially targeted investment (in Cooperstown’s case fossil fuels) to an investment with the same or superior risk-adjusted returns, and that the new investment satisfies fiduciary duties associated with prudent diversification.

Over the past 20 years, major public pension funds have indeed decided to divest from certain industries for social and investment related reasons.  The two largest divestitures have come in tobacco and firearms.  During the mid to late 1990s, I was assistant counsel in the Office of state Comptroller Carl McCall, and in such capacity acted as managing attorney of the then $120 billion state Common Retirement Fund.

During the analysis and decision to divest from tobacco, investment staff and independent outside advisers poured over data and projections to determine if there was a reasonable case to be made that, strictly from an investment perspective, it was prudent to divest from tobacco stocks.

Given the plethora of litigation around the industry at the time, the decision to divest, while debatable on either side, was a prudent decision based on unbiased research and reliance on the advice of the comptroller’s internal and external investment staff.  In hindsight, the decision ultimately cost the Common Retirement Fund returns, as the Dow Jones U.S. Tobacco Index has increased nearly 800 percent in value since 2000.  However, the process in arriving at the decision was critical to fulfillment of the Comptroller’s fiduciary duty.

Similar decisions and analysis have surrounded the firearms industry over the past four years since the Sandy Hook tragedy, with large public pension funds such as California Teachers (CALSTERS), California Public Employees (CALPERS) and New York City employees, police and fire divesting in firearms manufacturers.  Again, these decisions followed in-depth analysis by investment staff and outside advisers of the long-term return prospects of gun manufacturers, which is critical from a fiduciary perspective.

Incidentally, similar to the tobacco divestment, the investment returns (although on a shorter horizon) related to divestment from firearms have so far largely not yielded enhanced investment returns for pension beneficiaries.  For example, the stock of the two largest publicly traded firearms manufacturers, Smith & Wesson and Sturm Ruger, has increased in the past four years approximately 500 percent and 100 percent, respectively.

Taking all the above into account we now look at the limited information available (at least to this writer) surrounding the village trustees decision to divest from fossil fuel stocks in the pension fund.

The decision was most certainly a socially driven investment, as if it was purely investment related it would be fiducially incumbent on the trustees to fully analyze every component in the S&P 500 index (SPY) and make a sector-by-sector risk/return adjusted decision on whether fossil fuels were the right sector to divest from or if other components in the index were more appropriate for divestment.  Clearly this was not done nor should we want or expect the trustees to be in the stock-picking business.  As such, this is certainly a socially driven divestment and should be analyzed consistent with the trustees’ fiduciary and “sole benefit to beneficiaries” obligations and the Department of Labor’s non-controlling guidelines.

(i)

It is not clear if the trustees analyzed this decision to divest with the care, skill and diligence of a prudent person, i.e., it is not entirely known what objective research, analysis and advice the trustees relied on in arriving at its decision. The trustees appear to have relied heavily on Trustee Allstadt’s opinion as a retired oil executive and his obvious personal beliefs and investment conclusions against fossil fuels (they represent a “great threat to humanity,” and anyone who owns fossil fuel stocks is eventually going to “drive off an [investment] cliff”).

The only substantive research item mentioned in the local press is a September 2015 statement cited by Mr. Allstadt given by the President of the Bank of England that trouble is coming to the fossil-fuel industry.  A closer reading of that statement indicates that the president was saying that if each country adopted the International Panel on Climate Change estimate of a carbon budget that would limit global temperatures to 2 degrees above pre-industrial levels, there could be a large impact on the energy industry.  While this is a laudable goal, it is highly questionable at best that this is a realistic expectation in the foreseeable future and shouldn’t on its own be used to formulate an investment decision to divest from fossil fuels.

In addition, there is plenty of research that indicates that divestment from fossil fuels can damage pension fund returns.  A recent study by Professor Hendrik Bessembinder of Arizona State University’s Carey School of Business found that the costs associated with divesting from energy firms could be substantial. Over the next 20 years, the study estimates, a typical large institution could lose as much as $7 billion by deliberately excluding fossil fuel investments from its portfolio.  A similar analysis by Caltech economist Bradford Cornell found that the endowments of the Massachusetts Institute of Technology (MIT), Harvard, Yale, Columbia, and New York University would lose a total of $195 million for each year that they remain divested (Forbes, July 2016).

This is not to say that any particular piece of research is controlling or correct on the issue, but it is incumbent on the Trustees to appropriately and objectively analyze all reasonably available data on both sides of the issue.  It is worth noting that no major public pension funds, with large investment staffs and independent outside advisors, have yet to divest from fossil fuels.

(ii)

When analyzing if the trustees’ social fossil-fuel divestment and subsequent reinvest satisfies the Department of Labor’s guidelines that the new social investment has equal or superior returns to the old investment and provides appropriate diversification, it is important to look at the SPY index (the current index the pension fund is invested in) and the SPYX index (the index the trustees are transferring to and which does not include fossil fuel stocks).

The SPY index, which includes fossil fuel stocks, is 24 years old, has $195 billion of assets and has over a million shares traded daily.  During 2016 year to date, according to Bloomberg, the returns have been 5.87 percent, even though it includes fossil fuel stocks that have experienced a volatile year.  SPYX, which the trustees are transferring the pension fund assets into, was only formed in December 2015, has $107 million of assets, and has a daily trading volume of under 1,000 shares.

More importantly, recognizing SPYX excludes fossil-fuel stocks and is by definition less diversified, its returns, again according to Bloomberg, are 4.93 percent 2016 year to date, approximately 16 percent below the pension plan’s current stock index investment, SPY.

It is thus subject to debate if the trustees have fulfilled their fiduciary duty by moving the pension fund’s assets to a non-fossil fuel stock index (SPYX) with no long-term track record or history and which has received, on a relative basis, very limited investor capital support.  Further, it has not shown to date that its returns are equal or superior to the existing fossil fuel stock populated index (SPY).

Finally, when making any of the above decisions the trustees, made up to this writer’s knowledge of mostly non-financial professionals, should also give significant weight to the opinion of its financial related staff, in this case Village Treasurer Derek Bloomfield.  His opinion, citing guidelines promulgated for Certified Financial Analysts, was that a well diversified portfolio, including fossil fuel stocks, is the most stable and social investing  (especially with a very small fund) should be avoided except in one’s own personal portfolio.

Mr. Allstadt discounted this position and stated his viewpoint that the fossil fuel industry was in decline and that, incidentally, his financial planner had advised him and other ExxonMobil oil executives to divest from fossil-fuel stocks, which he had done.  This writer suspects that Mr. Allstadt’s financial planner was rightly advising the oil executives to diversify their portfolio away from an over-concentration in ExxonMobil stock (much as Treasurer Bloomfield recommended diversification for the pension fund) and that as a good financial planner he also advised Mr. Allstadt and the other executives to sell down their ExxonMobil holdings before the Federal effective capital gains rate went from 15 percent to 23.8 percent in 2013.

At the end of the day, as previously discussed, the trustees did not take Treasurer Bloomfield’s advice and voted to move the pension fund equity assets to the non-fossil-fuel stock index.  Mr. Allstadt explained the Trustees knew that Treasurer Bloomfield was uncomfortable with the decision, but he was just an “employee” and that it was a board decision and “that’s the time when everybody has to suck it up.”

This last statement is eerily similar to Nancy Pelosi’s famous statement that the U.S. House of Representatives needed to just approve Obamacare so everyone could then read what was in it.  Let’s all hope that when the Firefighters and Emergency Responders Pension Fund returns are “read” in the future, we as taxpayers are not paying higher tax “premiums” to fund their well-deserved retirement benefits.

 

 

The Goal: Doing All We Can To Reduce Dependence On Fossil Fuels

The Goal: Doing

All We Can To

Reduce Dependence

On Fossil Fuels

Professor Ingraffea addresses the Otsego Chamber’s Energy Summit Jan. 31 at The Otesaga

 

I was sent this article, “Until Available 24/7, Renewable Energy Not Ready For Prime Time,” from your newspaper of Feb. 21-22.
“Another speaker spoke of all the things he had done to remove himself from the grid. Again, I couldn’t help but wonder how he paid for it – solar, geo-thermal and a $100,000 Tesla electric car. Would the savings ever allow him to recover those incremental costs?”

DIVESTMENT — Fossil-Fuel Business Facing Major Change

Fossil-Fuel Business

Facing Major Change

Letter to Editor by LOU ALLSTADT

The Freeman’s Journal, Nov. 25, 2016

To the Editor:

I am again compelled to respond to Mr. Russell.

divestment-allstadt-jump-pageFirst, to remove any confusion, accompanying this letter is a graph published by S&P Dow Jones, which I made available to this newspaper two weeks ago. (To see chart, click image at left). The lower line is the original S&P500 index. The upper line shows the newer S&P500 index excluding fossil fuels, back tested to the beginning of 2012.

These are indexes of groups of stocks. They are not exchange-traded funds (ETFs) that investors can actually buy using a personal finance company like SoFi. ETFs based on both the full S&P500 and the S&P500 excluding fossil fuels are available for purchase and are designed to track the underlying index very closely.

So, if an ETF for the S&P500 excluding fossil fuels had been available earlier, it would have followed close to the upper line on the graph, while ETFs tracking the full S&P500 tracked close to the lower line.

There is a similar index, the Fossil Free Index (Symbol FFIUS), which goes back further in time and excludes a similar but slightly different mix of fossil-fuel companies from full S&P500 index. Over the past one, three, five, and 10-year periods, the FFIUS Index outperformed the full S&P500 Index. This index prompted some of the Cooperstown village trustees’ early questions about fossil fuels to our adviser, but there was no ETF-type investment vehicle available that would allow investors to buy the FFIUS index without incurring very high fees. Nevertheless, the FFIUS index does demonstrate that fossil fuels have been a drag on the returns of the full S&P500 for some time.

Second, Mr. Russell implies that I concocted a report after the fact. The description of the deliberative process that resulted in selling the S&P500 and buying the S&P 500 excluding fossil fuels was a summary of discussions at various village committee and board meetings beginning in early 2015 and culminating in discussions at August, September and October 2016 meetings of the Economic Development & Sustainability Committee, the Finance Committee and the Board of Trustees. All of the trustees and the mayor have confirmed that my description was accurate. Furthermore, during my tenure on the board of trustees, I can recall no other decision amounting to approximately $10,000 that has received this much attention. The trustees did their job.

Lastly, I agree with the editor’s headline. Experts do disagree on the future performance of fossil fuels. There are essentially two camps. One says the fossil-fuel industry is just in another down cycle, and all will be well when oil and gas prices recover. The other says that there are fundamental changes underway that will make it difficult for fossil fuels to fully recover.

Mr. Russell seems to prefer the “just another cycle” approach. He presents reports in the Wall Street Journal on buy or hold recommendations by stock market analysts. Most of these analyst reports are for short-term actions, speculating which way an individual stock’s price will move near term. When stock price moves far enough in one direction, those same analysts reverse their advice.

Such reports help speculators move their money from one stock to another. They are hardly relevant to long-term investments of pension funds that will be needed many years in the future.

There are a number of signs that pressure is building to reduce the use of fossil fuels, and those pressures are not limited to tree-hugging environmentalists. For example, here are excerpts from a resolution proposed to the House of Representatives in September of 2015 by Representative Chris Gibson and co-sponsored by Representative Richard Hanna (both of whom represent districts covered by this newspaper) and 13 other Republican representatives:

“…Whereas, if left unaddressed, the consequences of a changing climate have the potential to adversely impact all Americans, hitting vulnerable populations hardest, harming productivity in key economic sectors such as construction, agriculture, and tourism, saddling future generations with costly economic and environmental burdens, and imposing additional costs on State and Federal budgets that will further add to the long-term fiscal challenges that we face as a Nation;…

Resolved, That the House of Representatives commits to working constructively, using our tradition of American ingenuity, innovation, and exceptionalism, to create and support economically viable, and broadly supported private and public solutions to study and address the causes and effects of measured changes to our global and regional climates, including mitigation efforts and efforts to balance human activities that have been found to have an impact.

In 2015, CitiCorp’s Global Perspectives and Solutions Unit came out with a lengthy report entitled “ENERGY DARWINISM II: Why a Low-Carbon Future Doesn’t Have to Cost the Earth.” The report concludes that the the cost of addressing climate change by reducing fossil fuel use and improving energy efficiency will be less than the cost of dealing with flooding of coastal cities, droughts, population displacement and other costs that are likely if action is not taken to address climate change. “Given that all things being equal cleaner air has to be preferable to pollution, a very strong “Why would you not?” argument begins to develop.”

Very recently, the chief financial officer of Shell made news by stating, “We’ve long been of the opinion that demand will peak before supply. And that peak may be somewhere between five and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.” Until now, it was steadily increasing demand that drove this industry’s profitability and stock prices. Here is a senior person inside the industry saying that demand growth for the key transportation fuel sector will soon peak because of efficiencies and substitution of alternative fuels.

The foregoing are just a few examples of that would have been unheard of only a few years ago. There are many more examples that point toward fundamental changes in the fossil-fuel industry. There are also examples of large fund and institutional investment directors guiding their investment managers away from fossil fuels. Should the Village stand by and watch while large funds and foundations divest? These examples, combined with the weakened financial condition of most fossil fuel companies, which I covered two weeks ago, make the outlook for a cyclical type recovery very doubtful.

If Mr. Russell wishes to continue this exchange, I am happy to oblige. Or, we could perhaps give the readers a break and try to convince one another over a cup of coffee.

LOU ALLSTADT

Cooperstown

 

 

DIVESTMENT — Investors, Cooperstown Included, Can No Longer Ignore Climate Change

Investors, Cooperstown Included,

 Can No Longer Ignore Climate Change

Op-Ed by LOU ALLSTADT

The Freeman’s Journal, Thursday, Nov. 11, 2016

Editor’s Note: Cooperstown Village Board voted Oct. 26 to shift $140,000 in its firefighters’ and emergency squad retirement fund away from fossil-fuel stocks on the advice of Trustee Lou Allstadt, the retired Mobil executive vice president.  That prompted an analysis by attorney David Russell, a former pension-fund counsel in the state Comptroller’s Office.  This is Mr. Allstadt’s response to Mr. Russell.

divestment-page-4-11-11I am writing to clarify and respond to several points made in David Russell’s opinion piece in last week’s editions of The Freeman’s Journal and Hometown Oneonta on the Village of Cooperstown’s LOSAP retirement fund.

► What is LOSAP?

LOSAP is the Length Of Service Award Program that provides retirement benefits to firefighters and emergency responders based each individual’s activity level each year. It is a great way to recognize the contributions of these unpaid volunteers and encourage new volunteers to join.

The program is relatively new. It was started with an initial contribution from the village with additional amounts contributed each year as determined by an actuary based on the amount already in the program and the projected retirement payouts over future years.

Those annual contributions will continue for many years and the payouts will stretch out over many years. The latest contribution of about $65,669 brings the total fund to a little over $900,000.

Investment of the fund’s assets is administered by RBC Wealth Management (part of the Royal Bank of Canada), which has an office that specializes on administering LOSAP for a large number of municipalities in New York State. The administrator oversees the distribution of retirement checks and the day-to-day management of investments under guidelines provided from time to time by the village board of trustees.

The Village Board’s finance committee reviews the status of the LOSAP each month and the board of trustees again reviews the status at its monthly meeting. LOSAP is also audited. Village committee and board meetings are open to the public and the investment account statements are public information.

► How is plan administered?

From time to time the finance committee has called in the administrator to discuss the investment mix as well as the fees charged by individual funds. For example, a series of meetings and conference calls early in 2016 resulted in shifting both fixed income (bond) investments and equity (stock) investments from high cost mutual funds into exchange traded funds (ETFs) with similar returns but with low fees – a significant ongoing reduction in costs to the village.  That resulted in a widely diversified portfolio including large and medium sized U.S. and international equities as well as a range of U.S. and international bonds.

About two years ago, questions on investments in fossil fuels arose in the finance committee, the economic development and sustainability committee and the full Board of Trustees. Part of the concern was the environmental impact of fossil fuels and part was the growing perception of financial vulnerability among the fossil fuel companies. The administrator was asked to research and discuss alternatives with the finance committee.

At that time, there was no cost-effective way to divest and maintain a widely diversified portfolio, so no action was taken. Later, it became possible to invest in the individual business sectors of the S&P 500, so you can now buy all of the sectors except energy. This was discussed briefly but not pursued because it would rule out all energy, not just fossil fuels, and because it would result in higher transaction fees to buy the ten non-energy sectors.

More recently, it became possible to buy the S&P 500 ex fossil fuel as a single ETF. This fund tracks all of the S&P 500 companies except those that have fossil fuel reserves. Both indexes are calculated and published by S&P Dow Jones. The SEP500 ex fossil fuel index was initiated in December 2011, around the time when many investors started looking for a way to reduce exposure to fossil fuels. Since the initiation of the index, the S&P500 ex fossil fuels index has had higher annualized returns and higher risk adjusted annual returns than the full S&P 500 index. Details can be found at the following link (click methodology).

https://us.spindices.com/indices/equity/sp-500-fossil-fuel-free-index  

What Fiduciary Responsibilities Apply to Investments?

The U.S. Department of Labor has published interpretive bulletins to help fiduciaries in considering what they call economically targeted investments (ETIs) that involve environmental, social or governance (ESG) considerations. The most recent interpretive bulletin IB 2015-1 was issued on Oct. 26, 2015 replacing the previous bulletin from 2008. The 2015 bulletin covers the issue raised by Mr. Russell. Here is the most relevant portion:

“The Department believes that in the seven years since its publication, IB 2008-01 has unduly discouraged fiduciaries from considering ETIs and ESG factors. In particular, the Department is concerned that the 2008 guidance may be dissuading fiduciaries from

“(1) pursuing investment strategies that consider environmental, social, and governance factors, even where they are used solely to evaluate the economic benefits of investments and identify economically superior investments, and

“(2) investing in ETIs even where economically equivalent. Some fiduciaries believe the 2008 guidance sets a higher but unclear standard of compliance for fiduciaries when they are considering ESG factors or ETI investments.”

An important purpose of this Interpretive Bulletin is to clarify that plan fiduciaries should appropriately consider factors that potentially influence risk and return. Environmental, social and governance issues may have a direct relationship to the economic value of the plan’s investment. In these instances, such issues are not merely collateral considerations or tie-breakers, but rather are proper components of the fiduciary’s primary analysis of the economic merits of competing investment choices.

Similarly, if a fiduciary prudently determines that an investment is appropriate based solely on economic considerations, including those that may derive from environmental, social and governance factors, the fiduciary may make the investment without regard to any collateral benefits the investment may also promote.

Fiduciaries need not treat commercially reasonable investments as inherently suspect or in need of special scrutiny merely because they take into consideration environmental, social, or other such factors. When a fiduciary prudently concludes that such an investment is justified based solely on the economic merits of the investment, there is no need to evaluate collateral goals as tie-breakers.”

https://www.federalregister.gov/documents/2015/10/26/2015-27146/interpretive-bulletin-relating-to-the-fiduciary-standard-under-erisa-in-considering-economically     

This Department of Labor’s interpretive bulletin (above URL) makes it perfectly clear that the Board of Trustees’ decision is consistent with its fiduciary responsibilities.

Also, to put this in perspective, the change affects only the large capitalization equities portion of the $900,000 LOSAP portfolio. It has no impact on our bond investments that make up more than half of the portfolio, or on other classes of domestic and international equity investments. The change will be phased in over one year, a common method to average the price over time. The net effect after one year will be that approximately $10,000 (1.1 percent of the total) will be moved out of companies that have fossil fuel reserves and into all of the non-fossil fuel companies that make up the rest of the S&P 500. The LOSAP investments will remain a widely diversified portfolio.

On the other hand, I completely agree with Mr. Russell that investments for LOSAP should not be judged by the same criteria used in personal investing. For example, I would not support a LOSAP investment in renewable energy because of the present small size of the companies and the volatility of their results, even though I personally own a number of mutual funds and ETFs that are concentrated in various aspects of renewable energy.

►Fossil Fuel Investment Risks

Mr. Russell’s comments imply that he thinks fossil fuels are a safe investment. I am afraid that he is ignoring a number of serious warnings.

Possibly the most relevant warning for our situation comes from Tom Sanzillo, who like Mr. Russell, used to work in the state Comptroller’s Office. From 2003 to 2007, Mr. Sanzillo was the first deputy comptroller for the State of New York. Among his responsibilities was the supervision of a $150 billion globally invested public pension fund, with significant fossil-fuel holdings. This was probably a better vantage point to judge fossil fuels’ investment than Mr. Russell had during his earlier stay in the Comptroller’s Office. In a recent report for the Institute for Energy Economics and Financial Analysis, “Red Flags on ExxonMobil: Core Financials Show a Company in Decline,” Mr. Sanzillo wrote:

“The oil industry, led by ExxonMobil, the world’s largest publicly traded international oil and gas company, once provided its investors with outsize returns. This is no longer the case. Today annual cash distributions to investors are less than half of the annual average payout for the last decade. ExxonMobil’s future is one of diminished prospects.

“The principal drivers of oil industry profitability have eroded in recent years, and investors – institutional investors in particular, because of their fiduciary responsibilities to their shareholders – are faced now with hard questions about oil industry finances and about the suitability of owning stock in companies like ExxonMobil.

“Fiduciaries for institutional funds have a choice to make. They can ignore the downside and weak outlook of fossil fuels and thwart the world-wide search for alternatives (which is what happened when coal markets began to turn five years ago). Or they can act responsibly, directing their money managers and professional staff to construct investment plans that are increasingly fossil free.”

A few months earlier in July, Mr. Sanzillo and I participated in a press conference and webinar introducing an extensively documented report, “Unconventional Risks:  THE GROWING UNCERTAINTY OF OIL INVESTMENTS.” That report lays out the dismal financial results of the major oil companies – reduced profits, reduced cash flow, decreased investments, increased borrowings, decreased bond ratings, decreased share buybacks, decreased dividends. All of which are exacerbated by low energy prices, as well as gradually increasing competition from renewable energy and energy conservation, reduced access to low cost reserves in most of the world, and increasing measures to address climate change.

http://www.asyousow.org/ays_report/unconventional-risks-the-growing-uncertainty-of-oil-investments/

There are a number of other reports that warn investors of problems now and in the future for the fossil fuel industries. Citing all of them would take far too much space and would be fairly repetitious. One of the most succinct is a recent report from Black Rock, the largest asset management company in the world ($5 trillion under management). Excerpts from the report’s summary are quoted below.

“Adapting portfolios to climate change:  Implications and strategies for all investors”

 Summary

  • We start by detailing how climate change presents market risks and opportunities through four channels:

1) physical: more frequent and severe weather events over the long term;

2) technological: advances in energy storage, electric vehicles (EVs) or energy efficiency undermining existing business models;

3) regulatory: tightening emissions and energy efficiency standards, and changing subsidies and taxes;

4) social: changing consumer preferences and pressure groups advocating divestment of fossil fuel assets.

  • These factors can play out immediately (often the regulatory variety), in the medium term as economies transition to a lower-carbon world (often technological), and in the long run (often physical). Investor time horizons differ as well – and may require different approaches. The longer an asset owner’s time horizon, the more climate-related risks compound. Yet even short-term investors can be affected by regulatory and policy developments, the effect of rapid technological change or an extreme weather event.
  • We then show how all asset owners can – and should – take advantage of a growing array of climate-related investment tools and strategies to manage risk, to seek excess returns or improve their market exposure…

Investors can no longer ignore climate change. Some may question the science behind it, but all are faced with a swelling tide of climate-related regulations and technological disruption. Drawing on the insights of Black Rock’s investment professionals, we detail how investors can mitigate climate risks, exploit opportunities or have a positive impact. Climate-aware investing is possible without compromising on traditional goals of maximizing investment returns, we conclude.

We then reflect on steps that stakeholders in the climate debate are considering, including the use of carbon pricing as a cost-effective way to reduce emissions.

Our overall conclusion: We believe all investors should incorporate climate changeawareness into their investment processes.”  (emphasis added)

https://www.blackrock.com/investing/literature/whitepaper/bii-climate-change-2016-us.pdf

►Conclusion   

In my view, the trustees would be remiss in their fiduciary responsibilities not to consider reports like these and many others in evaluating investment decisions in the LOSAP portfolio.

A Few Minor Points
of Clarification

Mr. Kevlin is notorious among readers of this paper for not getting things exactly right. There is no S&P 475. It is a figment of Mr. Kevlin’s imagination. The ETF in question is the S&P500 excluding fossil fuels, whose symbol is SPYX. There is no 360.org, it is 350.org. And, apparently, a report in The Freeman’s Journal provided some erroneous background information about my investment and tax adviser to Mr. Russell, leading Mr. Russell to incorrectly, and I believe inappropriately, speculate on tax motivations for my selling ExxonMobil stock. Also, I have no idea what advice my adviser might
have given to my former
colleagues. She (not he) would never disclose such information.

 

DIVESTMENT — Expert Opinion, Advice Mixed On Future Performance Of Fossil-Fuel Stocks

Expert Opinion, Advice Mixed On

Future Performance Of Fossil-Fuel Stocks

Letter to Editor by DAVID RUSSELL

The Freeman’s Journal, Thursday, Nov. 18, 2016

divestment-tfj-page-a04To the Editor:

I read with interest Cooperstown Village Trustee Lou Allstadt’s response to my article regarding the Cooperstown Village Board’s decision to divest fossil-fuel stocks in the firefighters’ and emergency workers’ defined benefit plan. I thought some of his points merited a response from me.

It was refreshing to see Mr. Allstadt lay out a fiduciary argument for the board’s decision (notwithstanding it was selective and omitted material elements of a fiduciary analysis), although I am still a little confused regarding his implication that the SPYX ETF, which is 11 months old, has a 5-year track record.

However, it is fairly obvious that this was an “after the fact” fiduciary analysis prepared by Mr. Allstadt after my article was published and was not prepared before the board acted. Obviously, if there is a written legal analysis and objective Investment Memorandum that the board reviewed before it acted, I am sure the public would be interested to see it.

Mr. Allstadt also correctly notes that this divestment relates to a relatively small portion of the retirement fund. However, social divestment is a slippery slope and, without strict fiduciary guidelines in place, the personal causes of other board members could find there way into investment decisions – i.e, possibly a board member wants to divest from the defense and munitions industry, another gambling and casinos, another alcohol, etc. Do we really want that?

Mr. Allstadt also seemed to oddly interpret my statements supporting diversification in the retirement fund portfolio, as well board members avoiding acting as stock pickers and trying to predict the stock market in the future, as me stating I see fossil fuels as a “safe investment.” Obviously, they aren’t the best stocks to buy but they have always been relatively stable in the market. Mr Allstadt was using me as a “straw man” to launch into a professorial lecture supporting fossil-fuel divestment. However, once again he only cited sources supportive of his cause. If he was being intellectually honest and objective, he would cite the many credible sources on the other side of his argument and then rationally refute them.

For instance, he cites in detail an article by former state First Deputy Comptroller Tom Sanzillo (more to come on him later) citing dire predictions for ExxonMobil.

Fair enough, but Mr. Allstadt could have also noted that, according to the Wall Street Journal, of the 27 financial analysts that cover ExxonMobil, seven rank it as a “buy” or “outperform,” seven rank it as a “sell,” and 13 rank it as a “hold.” If we eliminate the buy/outperform and sell recommendations, we are left with the 13 hold (i.e, do not divest) recommendations that he could have discussed and attempted to refute in order to make his case more persuasive.

It was also somewhat humorous to see Mr. Allstadt put me in his “employee” category during my tenure in a previous administration in the state Comptroller’s office, and cite the fossil-fuel expertise of his fellow senior executive Tom Sanzillo, first deputy comptroller for Comptroller Alan Hevesi, who was responsible for management of the state Common Retirement Fund.

It is interesting, however, to note that when Mr. Sanzillo was in the actual position of a fiduciary (and not at a not-for-profit “think tank”) where he could have acted on fossil-fuel divestment, he never proposed or sought to do so (nor has the Common Retirement Fund or any other major public pension fund since). So using Mr Allstadt’s terminology, when he could have “sucked it up” and acted, Mr. Sanzillo consciously decided not to.

It is also curious that Mr. Allstadt would actively tout Mr Sanzillo’s management of the Common Retirement Fund. During Mr. Sanzillo’s tenure the Common Retirement Fund was embroiled in a major “pay to play” scandal which led to Mr. Sanzillo’s immediate boss – State Comptroller Hevesi – and the Chief Investment Officer of the Common Retirement Fund who directly reported to Mr. Sanzillo – David Loglisci – being convicted of felony corruption charges. Mr. Sanzillo was never charged in the scandal but abruptly resigned amidst press reports that investigators were highly critical of his management of the Common Retirement Fund. It seems fossil-fuel divestment, like politics, sometimes creates strange bedfellows.

Finally, Mr. Allstadt cited as “inappropriate” my statement that his financial adviser might have recommended that Mr. Allstadt divest his ExxonMobil holdings before capital gains tax rates rose in 2013. Mr. Allstadt, as a public figure and in a public forum, voluntarily disclosed his personal financial information and transactions, apparently to demonstrate his conviction around fossil-fuel divestment.

If Mr. Allstadt is sensitive and does not want to receive reasonable follow up questions regarding his publicly disclosed personal information, I would recommend he keep it strictly private in the future.

Thankfully, I am not a village employee who could be “written up” for “inappropriately” questioning a village trustee.

DAVID RUSSELL

Cooperstown

 

 

 

 

EKLUND: Praise For Fracking? Let’s Call In Fossil-Fuel Fiction
LETTER from BOB EKLUND

Praise For Fracking? Let’s

Call In Fossil-Fuel Fiction

To the Editor:

Normally, I would not respond to such pithy paeans of praise to the poison profits of pipelines as recently described by Mr. Zagata (Nov. 28-29) in this space. However, since my name and likeness, along with friend and fellow environmental activist Nicole Dillingham, were used as poster people for the piece, I feel I must.

First I must admit surprise at Zagata’s entry into fossil-fuel fiction arena, an area more usually occupied by the ever-zealous Dick Downey. Don’t worry, Dick, I find your efforts at fiction much more entertaining.

I have never been a paid activist and to claim that I and the thousands of others who gave of their time and energies were is an outrageous lie. Indeed most of the people I worked with used their personal means of transportation and funded their travel expenses out of their own pockets, a situation which may seem quaint to the former short-term head of the DEC.

As for the single “informant” who Zagata would have one believe speaks for all, there are no citations of payment, to anyone, in any amount, or on any continuing basis. Is the anecdotal evidence factual or just something Zagata pulled out of a “frackhole”?

Likewise his claim of a billion-dollar loss to the area. From whence do these figures derive? Or is this just another use of the tiresome tactic used by the fossil-fuel industry of throwing out eye-popping numbers in an attempt to appeal to the greed of those who would ignore any cost to the common weal?

I believe it was Mr. Zagata’s fellow fabulist, the aforementioned Dick Downey, who recently linked the opioid crisis to lack of methane gas. To link the tragic opioid cancer occurring in America regardless of whether there is methane available or not is reprehensible.

The opioid epidemic was caused by Big Pharma as recently shown by the “real” billions of dollars settlements agreed to by some of the more egregious offenders.  Ulster County, an area with ample access to methane gas, was recently named as the leading county in New York State for opioid-related fatalities. Of course, Big Pharma, like the Fossil Fuel Industry, throws millions of dollars into disinformation campaigns in an attempt to disguise their profit from poison business, one at the expense of individuals, the other at the expense of the planet.

I recall a conversation I had with Mr. Zagata a number of years ago in which I expressed surprise that (at the time) the DEC might support fracking.

I questioned how it was that the DEC tightly controlled the effluvia emanating from farming practices in order to prevent the contamination of waterways, but was willing to condone the rendering of millions of gallons of previously potable water owned by the public into permanently toxic waste.

His reply was less than illuminating. However, as this latest commentary demonstrates, he is still remarkably well versed in the aspects of barnyard effluvia.

The tiresome trope of people leaving New York State due to lack of methane gas, with acknowledgement to Clemens, is an example of twisting stats to a pre-formed idea. Might I suggest that a large number of people leaving are simply part of the “boomer” effect?

Ever since the advent of air conditioning, northerners have been seduced by the charms of winter weather below the Mason-Dixon Line.

New York being one of our most populous states had/has one of the largest populations of boomers reaching retirement age. It has been a time-honored tradition that they move south long before the advent of fracking. Another factor causing migration is the total lack of modern up-to-date communication abilities throughout most of rural New York.

The linking of diminishing church attendance is at the “are you kidding me?” level. More likely, people have stepped away from the church after having become dismayed by so many wrapping themselves in a holy banner in the service of Mammon.

Yes Mr. Zagata, I include you. At a time of year when many celebrate the story of a child born to parents fleeing oppression and hiding in a primitive manger is upon us, your assertions do little to help and much to harm. To suggest that the adherents of this faith, the same ones who are descendants of people who suffered persecution for their beliefs, are not up to dealing with a lack of methane gas is laughable. Unless of course, you are of the opinion that Mary and Joe would have been more comfortable in that manger if only they had a pipeline.

BOB EKLUND

New Lisbon

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