Not as Bad as 2005

It’s a good time to go long on Home Depot stock and to short all those companies that insure against natural disasters. The October 29^th Wall Street Journal tells us what the insurance costs were in recent disasters. In 2005 – the year of Hurricane Katrina – the American insurance industry took an unbelievable $130 billion hit.  Last year’s Hurricane Irene seemed to inflict a tolerable $4.3 billion slam to insurance carriers, but now there’s the new mega storm that has inflicted damage at levels that will be slowly calculated over the coming weeks. Experts predict as much as $50 billion (maybe more) from Hurricane (OK, “Superstorm,”) Sandy, but insurance companies might not get hit with more than $10-20 billion in claim payouts. Think of the suffering in that mega-billion dollar projected gap. And the operative word is suffering. Why people would think they need flood insurance when they live so far inland? Oh flood insurance doesn’t cover “below sea level”… and your basement is what????

When neither presidential candidate mentioned global climate change, speaking instead about the need to extract even more fossil fuels, use our massive coal supplies even more – even though there is no such thing as “clean coal” (the toxic effluents are pumped deep underground to be dealt with sometime in the future; nobody has found a commercially viable way to remove the actual toxic vapors from burning coal… nobody) – and the GOP argued to avoid stupid research and governmental investment support to alternative energy and instead focus on opening up our wilderness to more fossil fuel exploration. It is precisely these toxic emissions that virtually the entire scientific world is now, pretty much in unison, telling us was a direct result of burning fossil fuels.

Fact is this new century is already hotter than the last. “According to the latest measurements from the National Oceanic and Atmospheric administration, the average global temperature across land and ocean surfaces during September 2012 was 1.21 degrees above the 20th century average. That temperature ties with 2005 as the warmest September in the 133 years that records have been kept…

“More than anything else, after all, hurricanes need warm ocean water, usually above 79 degrees Fahrenheit, to thrive. High humidity also adds fuel. Over the last several decades, both ocean temperatures and water vapor have increased in large part due to the burning of fossil fuels, which increases the amount of carbon dioxide and other so-called greenhouse gases in the atmosphere. Such gases act like a blanket around the planet, keeping the sun's heat from bouncing back out into space. An important phenomenon for sustaining life, of course, but too much of the blanket effect can make life as we've known it far more difficult.

“Many scientists believe the concentration of those gases must be kept below 350 parts per million to avoid dramatic and runaway changes in our climate. That benchmark has already been passed… Average winter storm losses have doubled since the 1980s. Thunderstorms last year caused over $25 billion in damages, more than double the previous record.” Huffington Post, October 29^th.

It may actually be too late to reverse what may already have been a tipping point we completely miscalculated. All that talk about needing to open up fossil fuel sources to bring down the price of oil – a mythology against which I have frequently blogged – in order to fuel economic growth seems to have missed the biggest point of all: the cost of rebuilding from sequential mega-disasters, living with water shortages and sustained drought and coping with the vast losses of people separated from their homes and their jobs by nature… are vastly more expensive than any savings we could possibly achieve with greater exploitation of our fossil fuel reserves… and in fact using those massive reserves instead of finding non-polluting alternatives will only make the cost of our disasters that much worse. Throw in some death and severe injury, and the potential toll becomes immeasurable.

I’m Peter Dekom, and denial and ignorance are blissful twin killers… when the stakes get big enough.