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Putting Your Money Where Your Mouth Is
July 3, 2008 Environment

I am probably in the minority of citizens that is happy about $4.00 gas for political reasons. Politicians, seeing how much hardship is caused to lower and middle-income Americans when energy costs rise even modestly, seriously tone down their rhetoric regarding “doing something” about global warming. The dirty secret is that if you think $4.00 gas is a problem, many of the climate change mitigation proposals would have to see something like $10 gas or higher in order to have even a modest impact on climate change.

So rather than advocate energy taxes, the pontificating buffoons in Washington try to dupe people into thinking that a cap and trade system would mean something else – because no one is really willing to admit what the real costs of doing something about the climate will be. To that end, I laughed when I read this story a few days ago:

Costs for homeowner insurance along the East and Gulf coasts have risen 20% to 100% since 2004, says the Insurance Information Institute, a trade group … But regulators and other critics contend that the latest cat models — which include assumptions about various climate changes — are triggering higher insurance rates.

So what is it gonna be folks? If climate change is real, and the damages are going to be anywhere near what Al Gore says that are going to be, then how can you expect insurance companies to continue underwriting policies that do not account for it? Now that evil corporate America is starting to take steps to realize probably climate change scenarios into their business models, you decry that behavior? Are insurance companies supposed to function like charities, and subsidize the people that wish to live in low lying coastal areas at the expense of the rest of us who do not wish to take on such risks? Are profits such a horrible, dirty thing that no firm, nowhere is permitted to pursue them?

It’s time to wake up. If regulators and other critics are unhappy that insurance companies might appear to be banking higher profits due to higher premiums (their expected losses are higher, so where are funds supposed to come from when the next huge storm hits otherwise?), then how can they look their constituents in the face about the favored “cap and charade” programs? These programs stand to enrich some companies to the tune of tens of billions of dollars. After all, when BP, Duke Power, etc. get behind such a proposal, it can’t be because they are suddenly more socially conscious, is it? And a more basic point is, absent the ability of companies to pursue profits, where the heck do all the climate alarmists think that viable solutions to our energy problems are going to come from? Will they magically appear out of the sky? Will they appear on demand when our enlightened political class simply demands that these new technologies appear?

So once again, you can’t have it both ways. Either climate change is real and individuals and companies should rationally do something about it, or climate change is not real and companies and individuals should rationally do nothing about it. But you simply can’t argue that climate change is real and a serious threat, and then go batty when companies adjust their policies to reflect these possibilities – particularly if they are to make higher profits doing it. If this was such a knock it out of the park idea, then why aren’t more companies taking advantage of these higher profits right now?

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