When the S&P 500 index was created 90 years ago, the energy sector was one of its largest components and the company that came to be known as Exxon was the big dog in that sector. A decade ago, the energy sector represented 11.7% of the index. Today, it is just 4.4%, having been replaced increasingly by technology companies.
When S&P published its latest numbers at the beginning of September, Exxon was no longer in the top 10 companies, for the first time in history. It has slipped to number 12 and now represents just 1% of the total index. Microsoft, Apple, and Amazon are ranked first, second, and third, respectively, according to OilPrice.com. The other companies in the S&P 500 represent information technology, communications services, financials, consumer discretionary, and health care sectors. Visa has now replaced Exxon in the Top 10 rankings.
Bill McKibben celebrated the news with this tweet:
Many thanks to all who've worked to undermine this most aggressively irresponsible of corporations–for the 1st time in the 90 year history of the S&P 500, Exxon drops out of its top 10 stockshttps://t.co/SiMXNCK3Ss
— Bill McKibben (@billmckibben) August 30, 2019
“The oil sector has gone from being the leader of the world economy to a laggard,” Tom Sanzillo, director of the Institute for Energy Economics and Financial Analysis, tells Yahoo Finance. In the “be careful what you wish for, you just might get it” department, Yahoo Finance says the recent shale gas boom has driven down prices and made investors look elsewhere. Like a snake eating its own tail, the energy industry is increasingly desperate to remain relevant in a world in which people have discovered that sunlight, wind, hydro, and geothermal energy have zero fuel costs and competitive purchase costs, so why not use them?
OilPrice.com says volatile oil and gas prices, sudden price slumps, and concerns about future oil demand have combined over the past few years to make investors shun oil and gas stocks, making them one of the worst performers as a sector in recent months. In 2019 so far, the energy sector of the S&P 500 has been the worst performer among major industry sectors even though oil prices are higher now than they were at the start of the year. The S&P 500 is up nearly 15% this year, while the energy portion of that index is down more than 3%.
Exxon’s woes may be bad news for the company but wonderful news for those who would like to see the ability of the Earth to sustain human life extended a little while longer. The only way that is going to happen is to transition away from fossil fuels entirely. What’s worse — Exxon investors losing their shirts or your grandchildren inheriting a world shattered by rising seas, powerful storms, drought, famine, forest fires, and widespread disease? It should be an easy choice. That it isn’t speaks volumes about the human condition.