As chairman of investments at Guggenheim Partners, Scott Minerd thought he had a realistic view on how big an economic challenge climate change poses.
Then, at a Hoover Institution conference almost three years ago, he met former U.S. Secretary of State George Shultz. Minerd recalled him saying: “Scott, imagine that you woke up tomorrow morning, and the headline on the newspapers was, 'The World Has Discovered a New Ocean.’” The opening of the Arctic, Shultz told him, may be one of the most important events since the end of the ice age, some 12,000 years ago.
And while Shultz’s spokesman couldn’t confirm the conversation, there’s no doubting the melting of the Arctic ice cap, and the unveiling of resources below, presents mind-boggling opportunities for energy, shipping, fishing, science, and military exploitation. Russia even planted its flag on the sea floor at the North Pole in 2007.
Energy and shipping have been first up. Norway made its national fortune drilling in northern waters, and Arctic fossil fuel exploration has become a more prominent part of U.S. energy policy. Melting ice means that in summer months, cargo can travel approximately 5,000 km from Korea to New York, rather than the 12,000 km it takes to pass through the Panama Canal. Warming waters also open up access to commercial fish stocks, making the Arctic a growing source of food.
The headline and text of Eric Roston’s article clearly view the opening of the Arctic for commercial ventures as a huge opportunity. Well, trade routes through the Arctic will be convenient for some but technological advances already ensure that we have more than enough oil, gas and minerals. This is confirmed by today’s low prices for these resources. That may change some day but I think the continued and even accelerating advance of technology will provide the industrial resources, or even better substitutes, that the world will require.
The melting of Artic ice is also further confirmation of climate change in the form of global warming. This will have some very negative consequences, most likely starting with an increase in the rate of rising sea levels. The article mentions fishing but not any of the negative consequences. The last thing our dwindling fish stocks require is the plundering of their last refuge as factory ships sweep up critical supplies.
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