Texas declared an emergency from heat, then withdrew it. https://www.fox7austin.com/news/ercot-says-normal-operations-returning-after-issuing-energy-emergency-alert-2-on-wednesday-evening.
This is not the first time. Here’s an Aug. 25 report from CNN about the excessive heat in Texas and elsewhere: “The 77 places where extreme heat will break or tie records through Monday,” https://www.cnn.com/2023/08/25/us/extreme-heat-break-or-tie-records-weekend-monday-dg.
And here’s a photo and description links for a new Ford 150 electric vehicle with a special option of dual battery power, so that a person can hook up the truck and power his/her house for 24 hours if there is an electrical outage. Hat tip to Eric Schlesinger for the vehicle link – and for finding such a vehicle with a Texas license plate.
“FORD INTELLIGENT BACKUP POWER,” https://www.ford.com/trucks/f150/f150-lightning/features/intelligent-backup-power/
“2023 F-150 Lightning® FEATURES,” https://www.ford.com/trucks/f150/f150-lightning/features/?intcmp=vhp-seconNav-feature
Let’s try to put this in perspective. There is record heat in Texas. The Texas electrical grid pushed up against capacity on a number of days. Like Texas, nearby Arizona has rising heat-emergency medical cases. The Southwest heat dome is national news.
Texas has an anti-ESG policy, Senate Bill 833, which has been signed by the governor and came into effect on Sept. 1, 2023 (https://capitol.texas.gov/BillLookup/History.aspx?LegSess=88R&Bill=SB833). The fossil fuel industry lobby has succeeded in reversing policy toward sustainable and renewable energy that was pioneered under former Texas governors Bush and Perry. And now the Heritage Foundation has a “Project 2025” policy paper (920 pages) that focuses on the reversal of climate-sensitive Biden Administration policies (“‘Project 2025’: plan to dismantle US climate policy for next Republican president,” https://www.theguardian.com/environment/2023/jul/27/project-2025-dismantle-us-climate-policy-next-republican-president).
Here’s the press release for the “Project 2025” plan: “Project 2025 Publishes Comprehensive Policy Guide, ‘Mandate for Leadership: The Conservative Promise’" , https://www.project2025.org/news/press-releases/project-2025-publishes-comprehensive-policy-guide-mandate-for-leadership-the-conservative-promise/. The Heritage Foundation is also playing a key role in the DeSantis presidential campaign: “Insight: Conservative think tank emerges as force behind DeSantis campaign,” https://www.reuters.com/world/us/conservative-think-tank-emerges-force-behind-desantis-campaign-2023-08-18/.
In private conversation with friends and some colleagues who are in various leadership levels of the Republican Party, we have discussed the issue of a Republican officeholder or office seeker who is sensitive to the heating of the environment but faces a political onslaught if they are vocal about it. For them, this has become a political Hobson’s choice.
Maybe it will take a massive failure of the Texas grid and many heat-caused hospitalizations and/or deaths to trigger some change. Who knows?
Meanwhile, in Texas one must ask, how do I recharge my new Ford EV after draining the battery to power the air conditioning in my home when the electrical grid fails?
The last power crisis in Texas occurred in February 2021 due to severe winter storms. That caused major problems across the state with regards to heat, water and food, and caused consternation in financial markets. The Texas muni market has underperformed the general municipal market since the crisis by over 1% (Source: Bloomberg).
And that’s where we are as the September phase of the political silly season ensues.
Financial markets have yet to seriously price in outcomes.
Cumberland maintains a cash reserve in our US Equity ETF portfolio.
For background on administration and congressional efforts in the US energy arena, see “Investing in American Energy: Significant Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy Economy and Emissions Reductions,” https://www.energy.gov/sites/default/files/2023-08/DOE%20OP%20Economy%20Wide%20Report_0.pdf
Here is yet another direct impact of climate heating: “The Big Reason Your Insurance Is Getting More Expensive: Backed by nearly $1 trillion in capital and rising premiums, insurers might profit off the coming catastrophic weather,” https://www.barrons.com/articles/climate-change-insurance-companies-catastrophic-weather-8fdfe858
The insurance price tag for Hurricane Idalia alone will be massive: “Hurricane Idalia could become 2023’s costliest climate disaster for the US,” https://www.theguardian.com/us-news/2023/aug/31/hurricane-idalia-cost-update-category-3-florida-georgia
The climate crisis is directly impacting public health, too. Here is another way those impacts are coming home to Florida, Texas, and Maryland: “Important Updates on Locally Acquired Malaria Cases Identified in Florida, Texas, and Maryland,” https://emergency.cdc.gov/han/2023/pdf/CDC_HAN_496.pdf
Here is an excellent video (with transcript) from the Institute for Health Metrics and Evaluation (IHME), on the global health impacts of climate warming:
“The health effects of a warming planet,” https://www.healthdata.org/news-events/insights-blog/global-health-insights/health-effects-warming-planet
Finally, here is an interactive New York Times piece on the drastic situation with America’s groundwater:
“America Is Using Up Its Groundwater Like There’s No Tomorrow,” https://www.nytimes.com/interactive/2023/08/28/climate/groundwater-drying-climate-change.html
David R. Kotok
Co-Founder & Chief Investment Officer
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