Selling BP

Margaret Atkins MunroLet's Talk About MoneyLeave a Comment

I sold all of my shares in BP on Monday. As moral decisions go, this one was a no-brainer; as a sound investment choice, the decision was not as obvious.

Seven years ago, I purchased 25 shares of BP Prudhoe Bay Royalty Trust (BPT) (a wholly-owned subsidiary of BP) for $460. At that time, money was tight in my house, and $460 represented so many things: half a mortgage payment, a month’s groceries, almost half of my annual heating oil budget. Still, all my bills were current, and I knew I had enough money coming in to cover next months’ expenses, so I took the plunge.

From a purely economic standpoint, I wish I had robbed every account I could and bought far more. In the intervening 7 years, BP Prudhoe Bay has more than quintupled in value, and its quarterly dividend pays at a rate that makes all my other investments pale by comparison. Had I been able to purchase 25,000 shares instead of 25, my total return when I sold it on Monday would have been more than $3.7 million, including all dividend payments, and I would not be wondering how I’m going to fund my retirement or send my son to college.

I’ve always been philosophically conflicted about owning BP. How, I asked myself, could I invest in dirty energy when I truly believe that clean and renewable sources are what’s ultimately best for me, my family, and the planet. But dirty energy is what we were using when I bought those shares, and it is what we are using now; as oil prices skyrocketed, the value of my small investment in an oil company did, too, and that somewhat insulated me. Yes, I was paying more for every gallon I put into my car, or into my home, but I was getting that lovely quarterly dividend, which paid for a tank or two of gas every quarter. I would be foolish to say that it didn’t help.

And BP wasn’t Exxon, after all; it was Beyond Petroleum, the company whose ads would have us believe it was actively investing in alternatives. I did have moments of doubt, especially when the Prudhoe Bay pipeline developed leaks, but the bottom line was that, other than a momentary shift in the stock price, that accident didn’t really affect my bottom line. The share price quickly returned to, and then shot past, its previous high water mark, and the quarterly dividend continued to rise.

What’s probably governed my response to owning BP Prudhoe Bay over the last seven years is that it has performed above and beyond any other investment I’ve ever owned. I bought those shares when no one else did, and my foresight paid off in spades, at least from a financial standpoint. When the rest of the market tanked, I could always point to those shares, which miraculously rose in value whenever all other market sectors were performing poorly. This was the star of my portfolio, the proof of my investing acumen.

Those days are now history. Quarterly dividend amounts are due to be decided this week, both for BP Prudhoe Bay, which I owned, and for its parent, BP. I am absolutely convinced that neither company should pay a dividend, that every penny of available corporate resources should be diverted to stopping the spill and cleaning up the damage. The rules for a gigantic multinational corporation should not be any different than those for you or me at our local store—if you break it, you’ve just bought it.

Contrary to my opinion, BP will most likely declare some sort of dividend, citing the many investors who will feel hardship due its loss. But shareholder is just another word for part owner; investors buy a piece of the profits, but also assume a portion of the risks and liabilities that are an integral part of any company. Even taking into consideration the reduction or absence of a dividend, and the loss in value of the shares themselves, how can any shareholders compare their loss to that suffered by the people of the Gulf Coast?

The tragedy in the Gulf of Mexico is without precedent, and without equal; words can never convey the extent to which all of our lives have become poorer because of it. For as long as it takes to fix what’s been broken, every possible resource that can be thrown at the Deepwater Horizon disaster, should be.

I suspect that BP Prudhoe Bay will never equate the sale of my shares with an attack of conscience. Unlike investors in the parent company, I have gotten out, as the saying goes, at the top, earning an unbelievable profit from my investment. Down the road, I may miss my fabulous quarterly dividend, and the fact that the inflated price of these shares made my entire stock portfolio look better. But I only have to look at pictures of oily wetlands and tarry beaches to recognize that my sole real regret is that I ever invested in it in the first place.