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Hitting the Bottom Line: Where Activism has an Impact

Corporations are artificial entities that are constrained under law to prioritize the maximization of their stock value above all other values. This means that if people want to alter the behavior of corporations, they have to either force corporations’ behavior by changing law or by changing what corporations have to do to keep their stock values high.

Measured in these terms, the anti-fracking movement is a success. Investor and investment advisor David White is advising people that the price of natural gas stocks is too high and that investors should sell shares in natural gas stock:

There are many other reasons for RRC to fall. RRC is primarily a natural gas company. Its production is approximately 78% natural gas, 16% natural gas liquids, and 6% oil. Its great natural gas resources are primarily in the Marcellus Shale. Much of these are in Pennsylvania. This comes under Pennsylvania law, and Pennsylvania has recently passed the Unconventional Gas Well Impact Fee Act (Feb. 2012). This law imposes a new fee on every unconventional natural gas well drilled in the state. This is a non-negligible fee. RRC reported a $24 million (or -$0.15 per share charge due to this fee in Q1 2012). The fee will continue to be a problem for all new wells drilled in the state. On top of this new fee, the US Congress has recently introduced a new “Anti-Fracking” bill in both the House and the Senate. This could cause problems and expenses for RRC too.

The legislative action David White describes is a direct result of the political agitation engaged in by Marcellus Shale Protest and other anti-fracking movement groups. Their actions threaten natural gas stock prices. Consequently, it’s in natural gas corporations’ economic interest to address concerns about gas fracking pollution. The anti-fracking movement has succeeded.

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