The Angel or the Devil? Who Do You Choose?

By Pamela Kaval - August 14, 2012 | Tickers: BP, CVX, COP, XOM, RDS-A | 0 Comments

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I’m sure you have all seen this at least once in your lives in a TV show, movie or cartoon: someone is trying to decide what to do and there is an angel version of themselves on one shoulder saying “no, don’t do it” and the devil version of themselves on the other shoulder saying “you should do it, it will be fun.”  I feel like I am experiencing this all the time.

There’s a company in my town called New Belgium Brewery.  They make great beer.  But in addition to their beer, they also promote biking to work. They use wind power energy credits and power their trucks with biofuel.  I’m sure there are a lot of things that aren’t “green” about them, but they try, and I like that.  I guess I like that because I try too:  I recycle; I grow vegetables; I reuse things.  I even walk and bike as much as I can to go to work and for errands.

Even though I do walk and bike frequently, I also drive a car a few times a week.  My car uses gas and needs oil.  Because of that, I need to buy gas and oil and there are a lot of companies that supply it.  Some of the big names out there that I am familiar with are:  Exxon Mobil (NYSE: XOM), BP (NYSE: BP), Shell (NYSE: RDS-A), Conoco Phillips (NYSE: COP), Chevron (NYSE: CVX), Sinclair Oil and Petroleos Mexicanos (PEMEX).  All of the ones I mentioned that are on the New York Stock Exchange offer good dividends (2.6%-4.6%), have low P/E ratios and are providing something that a lot of people use.

But at the same time, environmentally destructive things can happen with oil and gas, especially in relation to oil spills.  I remember when the Exxon Valdez ship crashed in the Prince William Sound of Alaska in 1989.  Between 10 and 32 million gallons of oil spilled and a lot of that oil is still out there affecting the environment. As a result of the spill, many animals died, including fish, birds and seals. Many people lost their livelihoods.  It is over 20 years later and many of the populations, including herring, have yet to recover.  And when the population hasn’t recovered, commercial fishing is not allowed.  Hence, some people’s livelihoods are still affected.  Not only that, but Exxon still hasn’t paid the $507.5 million they agreed to pay.  They even asked for a reduction in the amount they would pay in 2008, but the money, as far as I am aware, has yet to materialize (and it seems to me like they have it).  Saying you will pay does not necessarily equal paying. 

If you haven’t heard of the Exxon Valdez oil spill, I’m sure you have heard of another, such as the Deepwater Horizon spill in 2010 or the Greenpoint, Lakeview, or Ixtoc I spills.  All of these oil spills caused environmental damage, which led to lost livelihoods and damaged ecosystems.  The responsible parties for the spills I named include, but are not limited to, Exxon Mobil, BP, Chevron, and PEMEX.   

Now you might be thinking ‘it’s not just oil companies’ that cause environmental damage.  That is true.  There are many other companies that have caused a lot of environmental damage, from pesticide appliers to chemical manufacturers.   Every company and every person in the world has some sort of affect on the environment; some more than others. And these affects are both positive and negative.

So what do we do?  Should we invest in companies that we know have caused a lot of environmental damage?  We use their products.  Their revenue is growing; they pay good dividends; they have low P/E ratios.  They are companies that have been around for a long time, as they are providing something that people are using (and I don’t see people stopping the use of these products anytime soon).

There is the angel on one shoulder telling me “no, don’t do it” and there is the devil on the other saying “go for it, you use gas and oil anyway.”  Personally, I don’t do it.  There are plenty of other companies to invest in that don’t put the angel and devil on my shoulders.  At the same time, are those companies any better in terms of environmental aspects?  I’m not sure (but I do try to look into it before I invest in any company).

Which do you choose?  How do you decide?  I’d love to know and I’m sure your insights will be beneficial to all.

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