All Recent GLG News Analyses by Leading Experts at Advanced Forecasting Corporation

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Global Climate Change: Adverse Effects In The United States Already

November 19, 2007

Analysis of:Global Warming: An Interview with Spencer Weart | quicktolisten.org

It is challenging to attribute specific natural phenomena, such as Global Climate Change (better worded than 'Global Warming' in my opinion due to the cooling witnessed in many parts of the world) to long-term causes, but an increasingly longer list of attributable effects are indeed occurring; in fact, climate change is affecting the USA in more than just subtle ways.  Climate change is already affecting many industries, from agriculture to energy, from retail and health to insurance and transport.  Of course, the media harps mainly on rising sea levels or glacier retreat, but those may seem a bit "wild" in the USA.  However, extreme weather events and the direct and indirect impacts are increasing in the USA.  And catastrophes resulting from extreme weather are exacerbated by increasing population densities, especially coastal zones.  Altered patterns in agriculture and increased flooding events, as well as weather volatility on energy systems all cause drastic economic impact.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Energy And Weather Forecasting: An Indisputable Marriage Of Necessity

November 9, 2007

Analysis of:Energy Risk – Weather Forecasts and Energy Companies | www.riskcenter.com

Energy companies are using weather intelligence in more ways today than ever before, especially as climate change appears to be becoming more volatile.  In most of the larger and successful energy firms, as well as those investment firms that trade a substantial amount in energy, weather forecasts -- both short-range and long-term -- assist greatly in strategic functions from planning through finance to operations.  While load forecasting is the primary use of weather data, customized and advanced predictions in weather risk management are now used in emergency response and contingency planning.  Add in asset management, maintenance planning, trading strategies and specific storm tracking -- and the whole "marriage" of weather intelligence with energy (and other industries) is for the purpose of the-all-vital goal of business continuity.  In summary, weather data is being used by increasing numbers in many different ways with very productive results on the bottom line.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Many More Adverse Weather Changes Are Likely On The Way

October 23, 2007

Analysis of:Climate Change Potentially Puts Civilization At Risk | www.tennessean.com

Let’s put Gore aside for a second. There lies a potentially very valid and logical theorem of the A=B, and B=C, then A=C type. A). Extreme weather causes environmental degradation. B). Disarray and disruption on an environmental scale causes conflict. C). Therefore abrupt events associated with climate change causes disagreement, discord, struggles, skirmishes, clashes and war. In many ways, addressing climate change seems beyond human capacity. But in reality, the morality of realizing how we can affect it looms larger each month. Climate change is happening almost every day in the USA too, not just in some faraway land. Climate change is not only a weather and environmental and economic issue; climate change is a security issue too. The theme here is to take our technology and reconfigure the economy in how we use energy: a future near-term revolution will change our economy, and on a positive light, it will be a source of jobs, development and opportunity for millions.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Warm Winter Cold Winter...Which Will It Be?: A Lot Is In The Cards For Oil

October 18, 2007

Analysis of:Oil Price Risk Is Weather, Not Economics: Goldman | peakoil.com

In Goldman Sachs’ most recent energy report, it says that if the fall into early winter is chillier than usual (by just 10% below normal temps) then that impact could push raise oil an additional $8 to over $93/bbl (granted, their forecast came out when crude was at $85). But that is not necessarily where it gets interesting: the report stresses that abnormal anomalies in the weather pattern will likely be a bigger threat on a near-future oil demand growth curve compared to any near-future economic slowdown, assuming that both the economy and the weather were to slide downhill at the same time (because there would be no way to compare apples to apples if an economic slowdown happened at a different time to an abnormal temperature streak). After reviewing & correlating a lot of weather and oil price data, I discuss below the probability of seeing colder or warmer weather for Q4, and with that information one might have a much better idea on where oil prices are heading (or not).

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Volatile Crude As Some Models See Potential Hurricane In The Gulf But Possibility Too That Storm Does Not Develop

September 20, 2007

Analysis of:Crude Oil Rises Above $82 After U.S. Cuts Rates, Stoking Demand | www.bloomberg.com

Focus away from the speculation of any interest rate cut, and put your attention onto the tropical weather situation for such a minute. Royal Dutch Shell is very carefully watching the potential development of a tropical disturbance off the coast of FL: they are already evacuating 300 workers (with 400 more waiting for evacuation orders) even though a storm has yet to be named. Somebody must have told Shell that the next named tropical entity, Jerry-to-be, could strike production platforms this weekend. That news in and of itself is enough to raise some hairs, and subsequently, oil prices too. So far this hurricane season, the US has had 4 landfalls: even though 3 were tropical storms, and Humberto was a minimal hurricane, it still has been an increasingly active season, and there are plenty of forecasts saying that a total of 6 landfalls are imminent before November. Of all tropical systems that form in September, one-third of them threaten refineries in the Gulf.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

OPEC Infatuation With Stretching The Truth Causes Oil To Climb Further

September 7, 2007

Analysis of:OPEC May Reject Calls for More Supply With Oil at $76 | www.bloomberg.com

I have followed OPEC closely for years, and I have carefully written down comments that come out of the Cartel, followed by the actions taken, and then of course the market pricing direction of oil -- up or down or steady.  It's been a very interesting ride over the years.  Metaphorically, OPEC loves to spin round and round, trying to catch its own tail, like some crazed mutt.  The Organization hasn't setan official price target since getting rid of the $22-28-a-barrel range over 4 years ago.  From that example alone, it has never caught up to reality, and therefore, it never does catch its tail, but continues trying...and as a result, the "dog" gets increasingly exhausted.  OPEC has chased so many of its own lies that it is exhausted, and really does not know what way to turn now.  As a result, the key implication is that OPEC will likely become more and more unstable, and oil prices -- although they will remain volatile -- will likely creep up and up, until the next confrontation.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Market Profits With Weather Derivatives Go Up On The Fear Of Global Warming

August 14, 2007

Analysis of:Hedge Funds Pluck Money From Air in $19 Billion Weather Gamble | www.bloomberg.com

Climate change is pushing weather risk management to new heights. In fact, the market is exploding: as of this past April, trading in weather contracts had a face value of $19 billion at the CME, a jump of 100-fold since 2003. Fears of global climate change are bringing to the table all kinds of companies from power suppliers to ski resorts that want to transfer the risk of adverse weather. As a result, hedge-funds, investment banks, insurers and other firms are devising novel ways of exploiting weather fluctuations by hiring more mathematicians, statisticians and programmers so they can get a piece of the multi-billion market in weather futures – financial instruments tied to everything from hurricanes to freezes and everything in between. Although trades are typically capped at between $1 million and $5 million maximum loss, thereby stemming the amount of failure, the path ahead is to make the caps much larger and increased losses could become larger in a hurry.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Expect Increasing Impact To The USA As China's Pollution Grows Exponential

August 7, 2007

Analysis of:The Green Leap Forward: Environmentalism is China’s fastest-growing citizen movement. Beijing isn’t cracking down on these new activists—it’s empowering them. | www.washingtonmonthly.com

Environmental problems now threaten the sustainability of China’s economic expansion. Despite Beijing’s ambitious targets, the country’s environment is getting worse, not better. Beijing vowed in 2002 to reduce sulfur emissions by 10 percent in 3 years, yet they climbed by nearly 30%. China has numerous national laws that sound wonderful on paper but can’t be enforced. The costs of environmental cleanup, property damage, and lost productivity – as reported by China’s State Council (the nation’s highest administrative body) – were at least $200 billion in 2005 (that number is probably conservative), almost 10% of the country’s GDP. Industry releases 2,000 tons of airborne mercury each year, which settles into the soil, contaminating 12 million tons of grain each year and threatening food safety, including China’s $31 billion agricultural export market. Time Magazine reported that only 6% of Chinese agricultural products imported to the United States are free from pollution.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Buying Into Decreased Hurricane Predictions Is Not Advisable

August 3, 2007

Analysis of:Forecaster Cuts 2007 Hurricane Outlook | today.reuters.com

WSI's public hurricane forecasts are watched by many risk specialists, especially in the energy & insurance industries.  Since WSI is calling for less of a hurricane threat in the Western Gulf -- where the majority of the oil and natural gas interests lie -- and because more forecasters are copying (for lack of a better word) the decreased total number of storms predicted -- it is increasingly more likely that oil prices will become more volatile in the next 60 days (through early October) -- contrary to the climb that has occurred over the past 60 days.  That is, one might expect Bearish trends occurring before hurricane activity occurs, then sudden Bullish activity when a hurricane does threaten the Western Gulf.  Buying into decreased hurricane predictions -- when the scientific factors to make hurricanes in the first place are becoming more conducive for a sudden increase in storm development -- is not advisable at all.  Of course, Mother Nature will tell us all very soon.

Simon AtkinsCEO, Senior Industrial Disaster Threat ForecasterAdvanced Forecasting Corporation

Have We Learned The Key Agricultural Lesson: Are Seeds Being Planted For The Creation Of Another ‘Dust Bowl’ and Too Many Bankrupt Farmers?

February 23, 2007

Analysis of:Good Weather, Prices Fuel Farm Boom | www.timesleader.com

KEY POINTS REVIEW

•    Moist winter weather across the Great Plains coupled with high grain prices driven by ethanol demand have sparked an economic boom in farm country.  Many compare opportunity for agriculture in years ahead as the “golden years” to-be since many farmers are currently enjoying the best grain prices in a decade.
•    The rise of the nation’s ethanol industry has fundamentally changed market demand for commodities like corn…as significant as the invention of the plow, in terms of what it means to agriculture.  
•    Producers are anticipating a good return on crop sales plus they are looking at larger harvests of wheat and corn.  The ethanol-driven farming boom is prompting farmers to invest in a record-load of new machinery to handle all of the new demand.
•    If wheat prices continue to fall, farmers will more likely graze or bale their winter wheat for hay rather than harvest it as grain. They would then plant corn, sorghum or soybeans because the return on those crops is better.  Farmers gross between $200 and $300 per acre of wheat they grow.  But with corn, farmers can gross as much as $800 per acre at today’s prices.
•    But perhaps too many farmers are spending money like drunk sailors by excessively getting in on the new “corn craze”.

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