As we constantly try and avoid the “unpredictable,” I thought I would throw out a few ideas and thoughts I’ve been hearing talked about in my travels. Obviously I have no idea if anything will come from the events, but they are certainly worth thinking about. As you know, I constantly talk about the “what ifs” pertaining to geopolitical risk, but these trends are more concerning in regard to weather and natural events.
El Niño – I can’t stress enough how much “weather” is impacted by El Niño patterns. As of this writing there’s still a 45% to 65% chance that a full-blown El Nino weather pattern will appear in 2015. To put it simply, this warm band of water in Pacific ocean could help push the global thermometer up further in many locations. The effects could mean many different things, most of which are highly unpredictable. The biggest fear would be a massive drought in Asia couple with intense rainfall and flooding in South America.
Blocking Deserts in China – I don’t know if you’ve seen this yet, but workers in China are busy planting the “Great Green Wall,” a massive belt of man-made forest that eventually will stretch nearly 2,800 miles across China, in an effort to block the growth of the Gobi and Taklamakan deserts and stem the massive dust storms they create. If the trees survive and do the job as envisioned, a similar green belt might be planted in Africa. How this so called “changing of the landscape” effects longer-term weather is still up to debate. Just understand there are some dramatic man-made changes to the landscape taking place. This sounds great in theory, but generally never works out so well in practical application.
- Ocean Acidification – The oceans are absorbing carbon dioxide and it’s causing the pH levels to change. In a just published study by British Canadian and Swedish researchers they conclude that shrimp aren’t going to taste so good to humans in the near future. There’s also been recent evidence that mussel shells are becoming more brittle because of rising acidity. There is no question that our oceans are changing. The more important question is how close are we to the “tipping point”?
- Water Shortages – We have discussed water shortages for the past several years and this year is no different. Expected water scarcity and problems with allocation will pose significant challenges to governments in the Middle East, Sub-Saharan Africa, South Asia and northern China. I continue to believe we will see increased civil and political tensions in regions where water supplies are limited.
Earthquakes – To start with, lets make certain everyone understands I am a huge proponent of “fracking” and the benefits associated with US energy production and self-reliance. But at the same time we have to acknowledge some additional risk-factors that are being talked about in association. Study after study is showing an increasing risk of earthquakes along various fault lines. It’s not necessarily the fracking itself causing the concern, but rather the disposal of the millions of gallons of waste water being pumped into injection wells or disposal wells. The oil and gas industry has been grappling with the disposal piece of the puzzle for years. Several states are now starting to jump on the bandwagon and propose legislation that bans fracking in certain areas because of what they are seeing as increase earthquake risk. Regardless of if you agree or disagree this could eventually turn into more substantial headwinds for the energy industry.