The Intercollegiate Student Magazine

Stagflation Shows Why We Need Divestment

The economy has had the highest rates of inflation seen in forty years. Many now speculate of an oncoming recession, but most recently, the World Bank has predicted that the economy may enter a state of stagflation. The only other time the economy was in a period of stagflation in the 1970s. And of course, one of the main contributors to stagflation in the seventies is eerily similar to what is occurring now: increasing oil prices. With a looming climate crisis, episodes of stagflation reflect yet another reason why countries such as the United States should divest from fossil fuels and shift toward a greener economy. 

In 1973, The Organization of Petroleum Exporting Countries (OPEC) led an embargo that caused crude oil prices to double over two years, leading to high inflation and recession in oil-producing nations. Gas prices soared, inflation was high, and Americans, of course, blamed the Democrats. Then the Iranian Revolution, which further stalled oil production, led to another period of stagflation from 1978 to 1979. Now, we are once again seeing increased oil prices as a result of geopolitical conflict. Since Russia is one of the largest producers of oil, its conflict with Ukraine contributes to the hike in oil prices globally. According to the Wall Street Journal, Russia’s oil production is expected to fall by 8%. Western nations are also purchasing less oil from Russia, hoping to add pressure to stop their invasion.

This issue has made the debates about fossil fuel divestment more complicated. Cutting off oil, in the short run, may exacerbate the inflationary problems our country faces. However, in the long run, it has become clear that the United States should speed up its transition to a green economy. If we continue to rely on oil, our economic health will continually be held hostage by geopolitical conflict, especially when oil plays a role in the conflict. Shifting towards renewable energy doesn’t just help the environment; it mitigates the effects of unstable oil prices on our economy. The costs of renewable energies are becoming less expensive every year, and will eventually be more cost-effective than oil and gas. The United States and other industrialized nations should take a stand against immoral actors who maintain their influence over the economy by producing oil. 

Over the past few years, many college activists have pressured their universities to divest from fossil fuels. Dozens of universities (and corporations too) as a result have divested. At Tulane University, grassroots activist organizations such as Fossil Free and Sunrise have garnered student support and ignited conversations around divestment on campus. These efforts prompted the Undergraduate Student Government to establish the Divestment Committee to work more directly with the administration on divestment. 

Tulane’s President Michael Fitts, however, has shown reluctance to divest, arguing that Tulane can have an influence over fossil fuel companies in Louisiana by keeping a stake in them. The argument goes that Tulane can use its position as a shareholder to encourage fossil fuel companies to become more sustainable. However, Tulane is a leading intellectual institution and economic powerhouse in Louisiana, where there is a powerful but decreasing fossil fuel industry. A divestment would make a much large statement against the fossil fuel industry, ultimately making a far greater impact. Tulane has also been opposed to using investments as political statements. The university is failing to recognize the importance of making a statement and the history of divestment on college campuses. Divestment played a notable role in ending apartheid in South Africa; now divestment can help combat climate change and make our economy greener. 

Universities and corporations have divested to make statements against the fossil fuel industry. Many have also shifted their investments towards more ethical industries and companies. Shifting investments towards renewable energy can help the United States move towards a greener economy, combat climate change, and limit Russia’s influence on the global economy. 

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Louisiana State University

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