Monday, June 25, 2007

Hot Money - Responsible Investing in a Warmer World

My latest Speculator column in IR magazine
advises corporate and national responsibility - invade Antarctica

Hot Money

Ian Williams

It is very short sighted of some large oil companies to pretend that global warming is not happening – the way to make money is to embrace the concept, and exploit the consequences.

Where some people see crisis, we speculators see opportunity. Global Warming offers big openings for canny investors who refuse to let dogma blind them to genuine opportunities for big bucks. 'Nuclear Winter" was only a possibility, and it was difficult to cope with, business-wise. No one really rushed out to buy bomb-shelters or Geiger counters because, rightly or wrongly, they had decided that nuclear war was not that likely.

But all these scientists and analysts, and even most governments, now tell us that Global Warming is a certainty, and we all know that investment thrives on certainty.

Just think through the consequences. The hotter it gets, the more demand there will be for refrigeration and air-conditioners, which will create more demand for electricity which uses yet more coal and gas to fuel the power stations. Now is surely the time to buy into mines and utilities, not to mention appliances, like air-conditioners, and fans.

Indeed, as the world heats up, think of the possibilities for cold soft drink and bottled water sales! They even help create their own markets. The ships and planes and trains and trucks needed to ship bulky fluids will be making the world hotter, and customers thirstier, all the time. What is more, can there be a better way to sequestrate carbon dioxide emissions than to pump them into fizzy drinks? The utilities will pay bottlers to take the CO2!

Climate change is also a great opportunity for some global hedging. As one part of the world suffers a Dioxide Drought, and wants humidifiers, other parts will be suffering from Dioxide Drowning, and will want pumps and dehumidifiers. Indeed the wetter it gets, more people will want and need SUV's to traverse the washed out roads and shorelines. Some will take to the air to avoid the discomfort of land travel as temperatures rise. Those cars and planes need gas, lots of it. Buy oil, auto and aerospace companies. (A side bet on inflatable dinghies may not be a bad idea either. No house within fifty miles of the present shoreline should be without one!)

Buying aerospace is an extra good deal because global warming pessimists warn of increasing security threats: populations from the Third World are on the move and countries in the developed world are competing for scarce resources. Defense spending can only go up.

But the real prize is on the back burner, as it were. Antarctica is up for grabs. We have to think long term. As it gets hotter here and the ice melts there, this huge and hitherto wasted continent becomes a desirable cool residential place to live with several lifetimes' supply of clean glacial water, both for fortunate inhabitants and for sale to the hotter places nearer the equator.

But that is only the beginning. As the world's oil supplies run out, the melting of the ice sheet around the South Pole makes accessible the world's last untouched major reserves of oil and coal. Talk about intelligent design! This can only be Providence in action. Just as global hydrocarbon supplies show signs of failing, there we are. Bingo! A whole new continent just bursting with carbon to burn as the ice cap melts.

At present, all territorial claims to Penguinistan are suspended until 2048, but good old Texan ingenuity and creative approach to international law can surely overcome that. It's not even as though there are any natives there to cause problems, although, come to think of it, we have looked everywhere else for Osama Bin Laden and have not found him, so perhaps we should be sending a task force to go look…

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