With global oil prices plummeting in recent months, environmental sustainability experts say fossil fuel divestment may now carry greater financial appeal for the University.

Since University President Peter Salovey’s August announcement that Yale Corporation’s Committee on Investor Responsibility had decided against divestment from fossil fuel companies, the price of oil has dramatically fallen, causing the price of energy stocks to slide. Although Fossil Free Yale — a student group advocating for divestment — has relied most prominently upon the social and ethical justifications for their cause, a financial rationale to divest has gained increased relevance in past months, according to experts interviewed. Still, it appears unlikely that the recent tumult in the energy market will cause the University to reverse its decision.

“With high-cost drilling projects being canceled, stock prices falling and demand not showing signs of responding, divestment is sounding more and more like the smart play for investors,” Brett Fleishman, a senior analyst at 350.org, an international environmental organization that advocates for divestment, wrote in an email. “The debate over fossil fuel divestment has now entered the conversations of investors who refuse to consider the moral implications of their portfolios; there is a new dynamism to the financial side of the argument.”

Fleishman said that institutional investors generally have a low risk tolerance, meaning that they are aiming to minimize volatility in their portfolios to invest for the long-term. He added that the dramatic drop in oil prices — over 60 percent since June — signifies volatility and the larger instability of the industry.

Andrew Logan, Director of Ceres’ Oil & Gas Program, a sustainability advocacy group, said the oil industry is more vulnerable now to a price decline than it was during the previous five or 10 years. He said the industry’s reliance on high-cost projects, including offshore drilling and tar sands oil extraction, may no longer be profitable with reduced oil prices. Unless the industry takes a different long term approach, investors have good reason to be pessimistic, he said.

Logan added that the high price of oil in the past five years was built on a “fragile foundation” and on high assumptions about global demand growth.

“A lot of the counterarguments against divestment were on how the oil and gas industry performed historically,” Logan said. “Now with how things are performing recently, it put things in a different light.”

According to Yale’s most recently released endowment report, the University currently has roughly 8 percent of its assets invested in natural resources, which include oil and gas, timberland, and metals and mining.

“Equity investments in natural resources … share common risk and return characteristics: protection against unanticipated global inflation, high and visible current cash flow, and opportunities to exploit inefficiencies,” the report stated. “At the portfolio level, natural resource investments provide attractive return prospects and significant diversification.”

Chief Investment Officer David Swensen declined to comment.

However, in light of the recent declines in the energy market, it remains uncertain as to what degree the University’s rationale for investing in this asset class still holds true.

Members of FFY maintained that the economic reasons to divest — coupled with environmental and political reasons — have always been central to their platform.

FFY organizer Chelsea Watson ’17 said that prior to the drop in oil over the past six months, FFY had argued that institutions could divest with a negligible impact on the endowment returns. Now it appears even stronger that Yale can actually benefit financially from divesting, she added.

“I am surprised that the administration uses the financial risk of divestment as an argument against it,” FFY organizer Tristan Glowa ’18 said. “In fact, the financial direction goes the opposite way.”

He noted, however, that falling oil prices are not unequivocally good for FFY’s broader goal to combat climate change. He said the increasing affordability of oil creates a false sense that people can use oil more freely, and while the economic cost may be less, the social cost is just as high.

Watson said FFY is continuing to push for divestment this semester and is preparing to put more pressure on the administration in time for Feb. 13, Global Divestment Day.

Still, Logan said despite the recent dive in oil prices, institutions may be less compelled to divest and may rather “hunker down” in the hope that the price of energy stocks will rebound.

“With a crystal ball, you may have decided to divest a few month ago,” he said. “But given the drop in share prices, the horse may have already left the barn.”