Tags: Gore | carbon | bubble | stocks

Al Gore: Carbon a 'Bubble,' Stay Away From Oil Stocks

By Dan Weil   |   Monday, 21 Oct 2013 11:13 AM

Many commentators talk about a possible bubble in stocks or homes, but former Vice President Al Gore may be the only one warning of one in carbon.

"We have a carbon bubble," he tells Yahoo, referring to the carbon contained in oil and gas reserves.

"Bubbles by definition involve a lot of asset owners and investors who don't see what in retrospect becomes blindingly obvious. And this carbon bubble is going to burst."

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The carbon-based assets held by multinational energy companies is now valued at $7 trillion, Gore notes. But that valuation is based on the idea that all those assets will be sold and burned, he explains.

"They are not going to be burned. . . . No more than one-third can ever possibly be burned without destroying the future [of the planet]."

Gore compares the carbon market to the subprime mortgage market before the financial crisis, with "absurd valuations" based on a "self-serving illusions."

Gore said he "absolutely" wouldn't invest in oil and gas companies or in an index fund that includes those companies, though such investments may be profitable short term.

"People can make short-term profits playing the psychology of the markets," he continues. "But if you're a long-term investor and you do not take into account the stranded-assets potential for carbon-based equities and debt instruments, in my view you're making a mistake."

As for renewable energy, Edward Guinness, co-manager of the Guinness Atkinson Alternative Energy Fund, touted its virtues in an interview with Oilprice.com.

"If you look at the drivers behind the industry, first on my list are scarcity and high prices of fossil fuels," he said. "I put second on my list energy security; third, the environment; and fourth, climate change."

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