Sure, it's mostly symbolic. But the global energy business is also on the cusp of a dramatic transformation.
John D. Rockefeller (far right) was a man on the move. His descendants are just following suit.
(Bettmann/CORBIS)
The name
Rockefeller is deeply synonymous with turning oil into gold. Familial
patriarch John D. Rockefeller founded Standard Oil in 1870 and bought up
most of the oil refineries in the United States, eventually controlling
over 90 percent of the American oil business. "Competition," he said,
"is a sin."
That empire, in inflation-adjusted terms, made him the richest man in history with
a fortune estimated at $336 billion in 2010 dollars. The Standard Oil
monopoly, meanwhile, was broken up and evolved into the global oil
brands Exxon-Mobil, Amoco, and Chevron.
But the times they are a-changin', and you don't need to be a weatherman to know which way the wind blows.
Rockefeller's descendants — who still control a cool $860 million
through the family philanthropy, the Rockefeller Brothers fund — are
dumping the endowment's investments in the oil business and reinvesting
at least a portion of that wealth into renewable energy.
And the Rockefeller fund is not the only big name fund divesting from fossil fuels and moving into renewables. The Divest-Invest movement
— which the Rockefeller fund has joined — consists of 800 global
investors, and has now moved $50 billion away from coal, oil, and gas
and into renewable energy as part of a broader push to battle climate
change and promote economic and energy sustainability.
Now, the Rockefellers' $860 million isn't much in the grand scale of the global energy business. The global energy trade is a $5 trillion a year business,
so even the larger $50 billion divestment equates to merely 1 percent
of the size of the global energy trade. And renewables today are merely 11 percent
of the global energy business. Plus, the Rockfeller Brothers fund has a
philanthropic purpose, not an amoral money-making one, and the primary
goal of the divestment seems mission driven.
But this is still an important symbol because the global energy business is on the cusp of a dramatic transformation.
As Stephen Heintz, president of the Rockefeller Brothers Fund, said in a statement:
Why? As I wrote last December,
renewable energy and particularly solar are on a very steep price trend
downward thanks to a continued spurt of technological innovations that
have reduced the cost of manufacturing. If the trend of falling prices
continues for another 10 years, solar-generated electricity in the U.S.
will descend to a point where it's competitive with coal and nuclear —
by 2020, or even 2015 for the sunniest parts of America. And if the
trend continues for the next 20 years, solar costs will be half that of
the price of coal today.
Meanwhile, as fossil fuel stocks have been gradually burned away, the
costs of drilling are rising as the easy-to-extract stuff near the
surface is exhausted. Today, complex extraction practices such as
fracking are unleashing new fossil fuel supplies onto global markets but
at a vastly higher cost than in John D. Rockefeller's day. That makes
the renewable energy revolution low hanging fruit for the next
generation of energy tycoons.
So it's no surprise to me that the Rockefeller family believes their ancestor would be behind their move. They're right.
