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How Global Warming Is Impacting Stock Prices

Bill Roth | Monday July 23rd, 2012 | 9 Comments

Heat waves and droughts magnified by global warming are exacting an economic tax on America’s middle class through higher prices and increased health care costs. Now this global warming tax is hitting the stock valuations of American companies.

Global warming’s economic tax hits restaurant stocks

The most visible evidence of how global warming could impact a company’s stock price occurred on July 20 with sharp declines in restaurant stock prices. Led by Chipotle’s stunning 20+% stock drop all the major restaurant stocks including McDonalds took a hit as stock analysts incorporated global warming’s heat and drought impacts upon restaurant food costs, profit margins and sales if higher menu prices trigger a consumer search for lower cost options.

Other stocks exposed to global warming’s economic tax

It is only a question of time before global warming’s economic impacts fall on other companies. Farmers earning less on reduced crop yields will not be in a position to buy new farm equipment from companies like John Deere. A lower food supply means less food to process, impacting companies like Archer Daniels Midlands. Gasoline prices will rise since 10 percent of today’s gasoline is composed of ethanol principally derived from corn. We have already seen national gasoline prices go up by over 10 cents during the last three weeks due to Middle East supply risks combined with higher costs for ethanol. Gasoline price increases that curtail driving will hurt retail sales at large gasoline retailers like 76 Stations and others. Retail stores that depend on consumers driving to their location to shop will probably see reduced customer traffic.

Cities hit by global warming’s economic tax

Cities that are already facing economic stress will be hit by global warming’s economic tax through higher electricity bills and the increased cost of caring for the elderly and weak who do not have the financial resources or human strength to handle an intense heat wave. The emerging economic choice confronting mayors across America from global warming’s economic tax is to further cut municipal services or try to implement higher taxes.

Are Disney and Carnival Cruise Line at risk?

Finally, our overall economy will take an economic blow to its already weakened economic growth. Higher prices that are not offset by growth in consumer income will generate a slowing effect or an economic tax on the economy. This holds the potential to hit companies like Disney or Carnival Cruise Lines that sell discretionary purchases like vacations.

Water’s price and supply questions confronting Starbucks and The Coca Cola Company

With 56 percent of the country now facing drought, the companies located in these drought-impacted areas are at economic risk in terms of their cost of water, their supply of water and the potential for reduced revenues from having to raise their product prices during a slowing economy. Beverage companies like Starbucks and The Coca-Cola Company are adopting sustainable business practices to address this threat to their profit margins and stock valuations.

Unemployment impacts from global warming’s economic tax

Higher unemployment is a likely consequence from the global warming economic tax. There are real limits on how much a business can reduce operating costs before it has to look at cutting jobs to preserve profit margins. Most companies confronting a global warming economic tax on their businesses will be hard pressed not to reduce their payrolls.

Stock and product winners

The economics of global warming will benefit the stock valuations of some companies like electric utilities that soon should be reporting record revenues as their customers turn up the A/C to stay cool enough to work and sleep. Natural gas prices just climbed above $3 per mmbtu as utilities use more natural gas to accommodate peak loads of electricity. That is very welcome news to the natural gas industry.

Companies selling higher SEER (Seasonal Energy Efficiency Ratio) air conditioners should see increased sales volumes. A few key names on the Energy Star list of air conditioning equipment manufacturers include Lennox, Carrier and Bryant. Higher electrical bills tied to increased air conditioning could be the economic push that moves geothermal heat pumps into a mainstream heating and cooling option. A couple of less well known companies on the Energy Star manufacturer list include ClimateMaster and Waterfurnance Renewable Energy that have launched higher efficiency technologies built around variable speed drives.

Home gardening can deliver lower priced and healthier foods using less water through the use of drip irrigation systems that are 90 percent efficient. Retailers and manufacturers tied to home food gardening should see increased sales.

Solar sales should also benefit those few utility service territories that offer a “perfect storm” of net metering plus high peak time electricity prices and high solar insulation levels. In these utility service territories, the economics of a 1.5 KW-sized rooftop solar systems should be very attractive to homeowners. Winners in this space should be SunRun and Clean Power Finance.

21st century’s trillion dollar sustainable economy

And the list of business opportunities will only grow as consumers get the message at their cash register, meters and pumps that global warming is an economic tax draining their pocket books. Consumer demand is creating a 21st century sustainable economy where companies win higher revenues and competitive advantage by offering consumers smarter, healthier and greener product solutions. In 2011, the global annual revenues of more sustainable goods and services achieved a milestone of $1 trillion. As the economic tax of global warming weighs heavier on both stock valuations and consumers, I now project the global annual sales of more sustainable goods and services to reach $10 trillion as early as 2017.

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Bill Roth is the Founder of Earth 2017. His book The Secret Green Sauce profiles proven best practices developed by pioneering business leaders on how to make money going green.


▼▼▼      9 Comments     ▼▼▼

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  • Arius_storm

    You do realize the earth has been cooling for the last decade according to nasa right?
    where do tou get this junk science?

    • http://www.triplepundit.com Nick Aster

      You do realize you’re making things up, right?

  • Kal3bb

    @ Arius_storm Understand the science first before you call this junk science. If you refer to the article the author is describing prices/economics. There is not much science in the article. I assume that what you call “junk science” is in reference to climate change. This does not necessarily mean the earth is getting warmer. Global Warming is an incorrect term (please revise Bill Roth) as it leads many people like Arius_storm to assume that it means everything is getting hotter. Climate change is the correct scientific term. Before you use the term “junk science” make sure you understand the science. The author is illustrating a valid and important point.   

  • http://www.cemtercume.com/ tercüme bürosu

    My friend sales copper and he told me last day that global warming change the prices. First I couldn’t believe. Then he told me the same things.

  • http://www.facebook.com/people/Peter-Mizla/100003258513930 Peter Mizla

    global warming  is becoming the most important issue this country will ever face- and will probably be this way the rest of this century- that the economy will dramatically change is a certainty- that our society will by far see the largest changes EVER- is also a certainty. The changes will bring  societal shifts, economic change (the end of capitalism as we NOW know it) pain, dislocation, within this country- globally it will be the same. A fascinating, but deadly time to be alive. If we begin to mitigate now- we will still face a huge challenges, if we wait another 20 years, those challenges become impossible to handle.

  • Bill Roth

    Thank you all for your posts. Global warming or climate change, here is a link to an article on “the new math” that is based upon the science:

    http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719

    And this new math in terms of our planet’s environment is having a transformational change in our economy. 

  • Squirrel Head

    Conspiracy realists generally deny global warming/climate scientists. Although I personally am a conspiracy realist, human caused climate change does not seem crazy to me. All the activities we engage in are sure to impact climate.

    That does not mean I favor the fake greenie solution. UN carbon tax. Environmentalsm must be encouraged at grassroots respecting people’s individuality, rights, constitution.

    Such as tax breaks for people who want to intall solar panels to emancipate themselves from the grid. Most solutions I hear about tend to be those of social engineers who want to program society and lifestyles.

    Conspiracy buffs should not deny climate change just because they hate the motives of many social engineers behind it. I do not know what the true result of our activities is such as pollution. Are we getting hotter? Colder? Just erratic? Etc. I am not a scientist, so I am not qualified to debate the science. BUt I am capable of appreciating my freedom.

    Where I live, it seems like we get almost as much rain as before, but we seem more dependent on a few large storms. 

    And I still post on this site because most greenies do care more than your average person.I just wish they would allow a greater place in their plans for individual freedom. And realize that many of the associations that appear to support their cause are really just control freaks.

    One grassroots iniiative for water I like is rain barrel water collection for lawn gardens. I thought of myself as just an eccentric idealist at the time. BUt when I look around and talk to people, I see that many individuals are doing the same thing. People should talk more about this.

     Even if you come across as bragging, it still puts the idea out there. 

  • Klem

    Abslutely irelevent. This is an election year, its the most important influence on stock prices at the present time.

    • Bill Roth

      Klem, no question that the political fiscal cliff is a real drag on our economy. But having said that, I would vote for the politician who could make it rain over the 56% of American now in drought. Did you see how corn prices dropped when it rained for a day this week in the MidWest? And when it turned out that rain was really pretty inconsequential how corn prices soared higher? Unsustainability is impacting businesses, our economy and the financial/commodity markets.