Ground Hog Shadow or Dark Gloom of Climate Gone Bad

Chubby, wiggly rodent? Check.  Black morning coat?  Check.  Top hat?  Check.  February 2nd is Ground Hog Day when the more sophisticated among us get a weather forecast.  We watch carefully to determine whether a ground hog emerges from his burrow to see his shadow.  A sunny day causing the little hog to cast a shadow portends six more weeks of winter.   A cloudy day with no shadow suggests spring rain showers are on the way.

It is a wonderful winter frolic based on lush folklore brought to North America by Germans who settled in Pennsylvania during the 1800s.  Traditionally, Germans celebrated Candlemas or the Feast of the Presentation of Jesus at the Temple on February 2^nd by watching the shadows cast by badgers.  Bears and fox have sometimes been pressed into meteorological service.  Of no importance, is the fact that none of these animals, even if they knew anything of calendars, have any interest whatsoever in communicating a weather forecast to humans.  

Ground Hog Caught Checking Weather Channel

They do care deeply about the weather!  Aside from the furry little mascots kept tenderly housed by ground hog clubs and zoos, their brethren in the wild are well attuned to the weather.  Right now ground hogs are a bit confused and worried about the weather.  They would very much appreciate some advice from humans! 

Warmer global temperatures are shifting seasonal patterns.  Winters are shorter and filled with more rain.  The number of snow days or even freezing days is fewer.  Spring is arriving earlier.  This leads to change in historic life cycle events, including animal births, bird migration and plant pollination.  While that might only mean your tulips will bloom at a little different time than usual, for animals it is a matter of eating or not eating.  Successfully bringing new babies into the world and raising them to independence is also on the line.

The climate changes faced by animals in the wild are of great consequence to humans.  An earlier spring thaw, or even the lack of a winter freeze in the first place, has far reaching ramifications for ecosystems, the very same ecosystems that provide our food, filter our water and supply raw materials for housing and clothing.  Ground hogs in the eastern U.S. saw dark shapes on February 2, 2018.  They are wondering if it was their own shadows or the dark gloom of a climate going bad.

Investors Must Face Human Consequences 

Ground Hog Day is fun  -  a tradition well worth preserving.  However, humans would do well to take the prediction of spring a bit more seriously.  A few of the consequences of a warming planet:

·        Longer allergy season with earlier spring

·        Loss of plants from ‘false spring’ that is later followed by killing cold weather

·        Loss of food crops due to population increase of pests from weather-related misalignment of species in the food chain

·        Loss of species due to more abundant invasive species with different weather-related habitant needs

·        Shifting food chain requirements due to longer summers and later onset of cool, fall temperatures.

Of course, these are impacts that are particularly notable in zones with temperate climates.  However, regions with less pronounced weather patterns such as the tropical or desert south are not impervious to the effects of global warming.  A warmer planet is likely to increase desert areas even with small changes in temperature or precipitation.  The incidence of drought is increasing, reducing food production for both animals and humans.  There has already been an increase in wildfires that destroy valuable habitat for animals and lead loss of housing stock and even human life.

This forum is not adequate to list all the changes that the planet is already experiencing on a daily basis.  Nonetheless, it is the right forum to call all investors to make climate questions a regular element of due diligence.   Generally accepted accounting principles may not require oil and gas producers to show in balance sheet line items the cost of continued combustion of fossil fuels that create global-warming greenhouse gases.    It is incumbent upon investors to make adjustments to balance sheets and earnings calculations to reflect what common sense tells us and not just what accounting standards allow.  

The ramifications of fossil fuels on population growth and climate change are too closely connected to deny any longer no matter what the impact on asset prices and dividend streams.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.