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Climate Change Causes an Increase in Natural Disaster Events Worldwide
Climate change patterns over the last 50 years caused by irresponsible waste output from the global economic system’s addiction to cheap, dirty energy has changed the natural world permanently. The workings of the world’s weather system have laid the foundation for the “expected” seasonal price fluctuations of global energy and agricultural markets as the supply and demand sides of both markets rely on “normal” weather patterns.
The past decade has given us some of the hottest years in recent history, causing an increase in weather variability. An increase in hurricanes in both the Atlantic and Southern Pacific for example causes larger risk premiums in Crude Oil, Natural Gas, Orange Juice and Rice markets among others due to the possible disruptions in the supply of these commodities. Energy markets build up risk premiums to to possible damage to natural gas infrastructure at the main US hub (Henry Hub) in Louisiana and possible damage to offshore crude oil rigs in the Gulf of Mexico. Agricultural commodities have price reactions to weather as any variability in rains or temperature can cause yield variance, and ultimately changes to supplies.
Commodities in general have seen increased volatility since the start of the new millennium due to several factors including realization of population straining global resources, dwindling global food stockpiles, and Hubbert’s peak oil theory calling the peak in global oil production. Migration of populations to cities over the past century has made coastal regions that are vulnerable to hurricanes - namely South Florida - much more susceptible to monetary damage and caused deaths. Regardless, the number of natural disasters in the world have been increasing steadily since 1900 as can be seen in the slideshow visuals. The increases have been seen mostly in floods and storm natural disasters.
With the continuation of natural disaster patterns, energy and agricultural commodities in particular will see increased risk premiums be built into their respective commodity markets - which in general means increased prices passed down to the consumer. Ways to prevent and mitigate climate change would have undoubtedly caused temporary economic growth disruptions, however now that the problem is close to its unrecoverable tipping point, the road to sustainable growth is much more complicated and will be much more expensive.
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