Roger is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Too much gas hasn’t yet raised enough of a stink to prompt action to clear the air.
And I’m not talking about the benefits of a good sized bean burrito from Chipotle Mexican Grill (a favorite company of mine with an estimated One-World-Rating, of OW-223(7)), though I wish I was.
The truth of the matter is the time has come to raise the red flag higher on the hidden cost of geological fracking, a high pressure technique of forcing more natural gas from shale formations deep beneath the same earth’s crust on which we, our homes, farms, cities and economy stand.
One word perhaps is enough to offer a reason why. Earthquakes! Yes, unbelievably, and mind-numbingly…earthquakes.
It isn’t enough that the definitive verdict is still out on whether or not fracking risks irrevocably poisoning precious supplies of ancient, crystal clear groundwater (an irreplaceable component of our one-world’s Natural Capital) used for drinking and irrigating crops. Now we learn of an unprecedented rise in the rate of recorded earthquakes, thought to be man-made, happening beneath our feet.
Bloomberg reported on a recent government scientist study suggesting a “spate of earthquakes across the middle of the U.S. … ‘almost certainly’ man-made, … [and likely] caused by wastewater from oil or gas drilling injected into the ground.” Most disturbing, citing U.S. Geological Survey sources, the report states that “for the three decades until 2000, seismic events in the nation’s midsection averaged 21 a year. They jumped to 50 in 2009, 87 in 2010 and 134 in 2011.”
Although these earthquakes are all fairly small, this is scary stuff when the safety of fracking depends upon preventing potentially toxic wastewater used in the fracking process from polluting the supplies of pure groundwater on which life on our one-world depends.
What are the implications of these uncertainties surrounding fracking for the concerned investor?
I am one who has been ambivalently eyeing promising investments discussed by fellow Fools whose opinions and expertise I greatly respect. Westport Innovations (NASDAQ: WPRT) and Clean Energy Fuels (NASDAQ: CLNE) both looked very promising as one-world plays committed to promoting the green economy of a sustainable world. Natural gas is, after all, a cleaner burning fuel compared to oil so it offers a pragmatic step in the right direction. In addition, it is a local resource, meaning local employment and investment. And, better still for the economy, as an energy source, it is cheaper, thanks to fracking.
Best of all, however, was that the increasing use of natural gas for transportation promises an incredible investment opportunity. A new technology to convert diesel engines to burn natural gas has seen a natural gas highway emerge that is already transforming transcontinental trucking. In addition, the ubiquitous fleets of green and brown trucks of Waste Management (NYSE: WM) and UPS (NYSE: UPS), seen in every city across the nation, are already making the conversion, as are public transportation buses. All this puts us on the cusp of a great investment opportunity to get in on the ground floor before other investors do. I for one can barely resist.
But resist I am. The “fracking” risk to this one world we all depend on is just too great. It should be enough that the definitive verdict is still out on whether or not fracking threatens to irrevocably poison precious supplies of crystal clear ground water used for drinking and irrigation. But now earthquakes?
In the absence of any scientific consensus, the precautionary principle argues that the burden of proof remains with the oil and gas industry to demonstrate that the practice of fracking poses no red-flagged, catastrophic threat to the Natural Capital (planet), and therefore the Social Capital (people), and Economic Capital (profit) of this one world we depend on. Until they do, the One-World-Ratings (OW-Rating) for these much touted companies have to be red flagged in warning.
Both Westport Innovations’ and Clean Energy Fuels are therefore given a One-World, sustainability-rating of OW-012(3). Because of the potential catastrophic threat to the nation’s priceless and irreplaceable groundwater supplies posed by the fracking process of natural gas production, on a scale of 1 through 3, both companies receive, not just a “0,” but a red “0” for their concern for Natural Capital (planet). Each receives a “1” for their concern for Social Capital (people) in that, while they may pay good wages, these are offset by potential costs posed by a deteriorating Natural Capital. As investments, and with 5-star and 4-star CAPS-ratings respectively, both companies receive a“2” for their promise of growing Economic Capital (profit). Finally, as the sum total of the ratings of each of the three forms of capital, both recieve a single-digit One-World-sustainability-rating, of a possible 1 through 9, of a red (3). Concerned investors should rather invest in companies like Chipotle Mexican Grill - One-World-sustainability rating of OW-223(7) - whose gas production requires no earth shattering fracking, and others which quietly sport profitable sustainability-ratings of (7), (8) or (9).
No, as a Fool I’d rather take Chief Jester, David Gardner’s advice and ‘fish where others aren’t” by finding those companies that are “doing well by doing good.” Whole Foods Market (OW-323(8)) and Starbucks (OW-223(7)) have far better One-World-Ratings than any company in the oil and gas or related industries. Companies like them can be very profitable, growing Natural, Social and Economic Capital simultaneously. And they come with other benefits I covet too - paying dividends that feed ones soul. In fact, One-World-Rated companies can help us invest in yet a fourth form of capital, Spiritual Capital, so vital for a healthy world, which perhaps brings us round, full circle, to where it all began and begins again.
Motley Fool newsletter services recommend Clean Energy Fuels, Waste Management and Westport Innovations. The Motley Fool owns shares of Waste Management and Westport Innovations. TripleEFocus1 has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.