CONTRIBUTOR
Liberals are touting a new study linking climate change and inflation, but economists say that the real causes are more likely to be massive government interventions in the economy purporting to save the climate.
Climate activists, including Climate Power — which is spending $80 million to support President Joe Biden in 2024 — have touted the study’s findings, while outlets including The Associated Press, ABC News, Axios, The Los Angeles Times and The Hill have also pushed the study since its release. Democrats on the Senate Budget Committee also promoted the study on X, formerly Twitter, stating thats its findings demonstrate another way “that climate change is raising costs for families and threatening our entire economy.” (RELATED: Inflation Reduction Act ‘Has Nothing To Do With Inflation,’ Biden Says)
Democrats and other defenders of the Biden administration have variously blamed Vladimir Putin, the pandemic as well as corporate greed or price-gouging for inflation.
“We find a rich response of inflation in different price aggregates to fluctuations in a variety of weather conditions. The strongest and most consistent signal arises from fluctuations in average monthly temperatures,” the study states. “Although larger in food prices, these impacts also translate into considerable effects on headline inflation. We find limited evidence for impacts on other price sub-components asides from weak evidence in the electricity sector.”
The study projects that food inflation could jump by as much as 3% annually over the next 10 years due to the impacts of climate change, especially increasing temperatures and heat waves. The study states that the food inflation Europe endured in the summer of 2022 would be amplified by between 30% and 50% by 2035 given the warming the study projects will occur by then.
“Inflation is a monetary issue. It has to do with the money supply. The Earth’s average temperature does not affect the amount of currency in circulation,” Ryan Young, a senior economist for the Competitive Enterprise Institute, told the DCNF. “Climate change policies, rather than climate change itself, do tend to increase inflation. They do this by increasing deficit spending, which central banks are more or less obligated to finance … Typical climate change policies have an additional, smaller effect on inflation by reducing productivity. Green products are often less durable and less efficient, and they take up investment dollars that could have gone to other uses.”
The U.S. money supply, or the total amount of money circulating in an economy, as of January 2024 reflected an increase of nearly $5 trillion relative to January 2020, just before the pandemic occurred, according to data from the Federal Reserve Bank of St. Louis. Inflation has been a persistent problem for the Biden administration and the American economy since 2021, with the consumer price index (CPI) increasing by 18.5% since President Joe Biden took office. (RELATED: ‘Economic Disaster’: Biden’s Budget Dreams Would Add Even More Fuel To Sky-High Inflation, Experts Say)
The Biden administration has pursued “the most ambitious climate agenda in history,” proposing to reshape America’s power grid, cracking down on oil and gas leasing and seeking to force electric vehicles to eventually dominate the American auto market. The Inflation Reduction Act (IRA), Biden’s signature climate bill, contained $369 billion for green initiatives, but Goldman Sachs projects that the actual price tag for those programs could ultimately reach about $1.2 trillion.
Europe has also seen massive inflation since 2021, and the European Union intends to spend hundreds of billions more euros on climate policy and initiatives through 2027, according to the European Commission.
Three of the study’s four authors — Christiane Nickel, Eliza Lis and Friderike Kuik— are affiliated with the European Central Bank, an institution that significantly underestimated inflation in 2021 and 2022 amid an energy crisis and massive fiscal stimulus in response to the pandemic. While the European Central Bank and several of its affiliated researchers were involved with the study, the paper does not reflect the official positions of the institution or the “Eurosystem,” the study notes.
“Climate change won’t drive inflation. It is so gradual that prices have time to adjust,” Diana Furchtgott-Roth, the director of the Heritage Foundation’s Center for Energy, Climate and Environment, told the DCNF. “The effects of warming are swamped by the far greater demand of upwardly-mobile people asking for air conditioning and other energy-intensive goods.”
“It is the solutions to climate change that drive up prices,” she continued. “Intermittent electricity, with wind and solar powering on and off with the wind blowing and the sun shining, and then backed up with gas that kicks in when wind and sun stop generating energy, is more expensive than continuous energy. That’s why electricity bills are rising.”
The authors of the study did not respond immediately to requests for comment.
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I’ve been saying for years that the increase of the cost of energy increases the cost of everything.
I seem to be living in a stupid world, if that is not obvious.
When Orwell wrote “Animal Farm” he needed a boondoggle to represent useless government projects. He chose the wind mill.
That and 1984 make Orwell a modern Prophet
He wrote 1984 and Animal Farm as cautionary tales, not instruction manuals.
As the statement goes, “Where do you think the bottom half of your class found employment?”
Journalism?
Politics?
Biden attended, on and off, one of the lowest ranked law schools in the US, Syracuse Law School.
He played a lot of basketball and plagiarized his way through, and was personable and told good jokes, and lied a lot.
Only recently, he mentioned, he rode the train across the Baltimore bridge that was wiped out.
It turned out, the bridge never had any railroad tracks.
It was widely NOT reported by the lapdog Media
Stubborn inflation is due to government $TRILLION deficit spending on useless/wasteful/porkbarrel programs that line the pockets of the political elites and friends, such as
almost $1 TRILLION on defense/intelligence, including gifts for protecting Europe, and $ for Ukraine, Israel, Taiwan, etc., and
about $200 billion for illegals collection, processing, subsidizing, and distributing into legal addresses so they can be put on voter lists. THE FIX IS IN, ACCORDING TO MUSK
Energy is the lifeblood of the economy.
And you have been wrong for years/
Proces are increased by the people selling those goods and services. There are always consequences from raising prices: Fewer sales.
If businesses could raise prices with no consequences, then why wait for a hike in their energy costs to raise prices? Why not just raise prices anytime they feel like it?
Claiming rising energy prices cause rising prices is like predicting runaway inflation, which is just as dumb as runaway warming predictions
Example of the myth:
Energy prices increase
All other prices increase
Energy companies costs go up
Energy companies raise prices All other prices increase
Now we have runaway inflation !
AND that “Cost of Goods” that must be passed on to consumers is greatly affected by the “Cost of Energy”
Cost of Electricity…to operate the business
Cost of Gasoline/Diesel to deliver products to the business
Cost of Gasoline/Diesel for the business to deliver products to the customer
Cost of maintenance (also affected by energy costs)
Businesses aren’t going to pay those higher energy costs and not pass them on the consumer in the form of higher prices, especially if it affects the bottom line profitability of the business
that must be passed on to consumers
In previous conversations, Richard has insisted that costs and price have no relation.
Costs and prices have no correlation in a Socialist Utopia. Everywhere else in modern capitalistic societies they’re very closely tied
And all Socialist “Utopias” have adopted some form of capitalism to “stay in business”.
Not true.
A majority of US publicly traded companies are not profitable
Dies that prove costs and prices are not correlated most of the time?
Of course it does.
That and 2¢ will buy you…nothing
That and 5¢ will buy you…nothing
That and 25¢ will buy you…a cheap toxic Chinese toy from a gumball machine
That and a dollar won’t even buy you a cuppa, thanks to Bidenflation spurned by higher energy costs
Costs are determined by the price of everything that goes into making and delivering a product.
Price is determined solely by supply and demand.
Additionally, price is limited first by what the consumer is willing to pay at the upper end, and by cost at the lower end.
If a product costs more than the consumer is willing to pay, then the producer will either lose money, or quit making the product.
Richard is correct in that there is no direct relationship between price and cost.
Price is determined solely by supply and demand.
Cost has an impact, as you continue on to explain:
“price is limited … by cost at the lower end.”
The impact that cost has, is in the company deciding whether it will continue producing.
Not true
Many companies operate by burning cash from stock and bonf offerings, hoping to becoming profitable someday
That means they are selling at a loss, sometimes for a long time.
Some very large companies started that way
Tesla spent 17 years unprofitable
Amazon took 9 years before becoming profitable
Apple took two years to become profitable
The percentage of profitable IPO companies increased from 28% in 2021 to 34% in 2022, compared to 29% of all IPO companies between 2016 and 2020. Only a single life sciences IPO company in 2022 was profitable (4% of all life sciences IPO companies), compared to 46% of non–life sciences IPO companies.
Ford F-150 Lightning might be a useful example.
Mark, the relationship between price charged and cost of making
a prod is very strong if it’s not a luxury product. The relationship is intensified by competition. If someone is making a windfall profit, it attracts competitors until market price squeezes profit margins to barely acceptable percentages.
Warning
If anyone says I’m correct on any subject, a mob will come after them with pitchforks and torches, with angry faces hidden under hoods, for a lynching. And that’s if they are in a good mood.
I wrote a for profit economics newsletter for 43 years and had hundreds of paid subscribers.
Warning
Dare I say it…You are correct
Ouch…ouch…oops, gotta run
“Additionally, price is limited first by what the consumer is willing to pay at the upper end, and by cost at the lower end”
Of course that is NOT true as I explained in an earlier comment.
Over half of publicly traded corporations are NOT Profitable.
That means they are selling products or services BELOW their cost.
Cost is NOT a bottom price limit for any individual company.
The prices people are willing and able to pay for goods and services do not get decided by the seller’s costs, which the buyer would not even know.
The goal of the seller is to offer a competitively priced product or service that will earn a decent return on their investment.
Sometimes that happens but most times it does not.
Fewer than half of publicly traded companies are profitable over a full business cycle including at least one recession.
According to the SBA, approximately 80% of small businesses survive their first year. The survival rate decreases to 50% after five years and 30% after ten years.
Prices are determine by buyers
Costs are determined by sellers
Sellers can not raise prices with no consequences. That’s why they try to control costs
The belief that if some business cost increases, such as energy, a company can just increase prices with no consequences, is a myth.
The job of the seller is to buy at wholesale and sell at retail
Retail is determined by…
…Initial cost at wholesale
…cost of doing business…
……energy costs
……space lease costs
……employee salaries and benefits
……advertising
…storage space costs (warehouse)
…profit for the store owner
These determine prices that must be charged for the business to remain viable. Businesses that don’t turn a profit (or aren’t handed subsidies from government coffers) are eventually doomed to failure
Like Wind and Solar…without government subsidy payments they would cease to be profitable and would fail
Retail prices are determined by what buyers are willing to pay and influences by the prices of competing products.
You clearly do not understand how businesses work.
Customers care what you charge for a product or service. They do not know, or care, what the product or service fully accounted cost is for your business.
Cost of energy is a large part of the overhead.
Mr. Greene says:”And you have been wrong for years/“
After reading your post several times I believe you forgot the sarc after the slash.
I hope so. Otherwise, he had the same Econ 101 “professor” as AOC.
(Economics is absurdly simple. There is but one equation – production times prices is always equal to currency in circulation.)
As of September 20, 2023, the Federal Reserve estimated that the total amount of currency in circulation was approximately US$2.33 trillion.
The market size of currency circulating in the United States economy is typically under ten percent of the country’s GDP.
2Q 2023 Real GDP was
$26.80 trillion.
GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time.
“(Economics is absurdly simple. There is but one equation – production times prices is always equal to currency in circulation”
US production times prices is GDP
US Currency in circulation is about 10% of GDP
You get a C, for Clueless.
You are still wrong
no sarc
Just one example of a flaw in your erroneous logic: 60% if the cost of food is transportation. You don’t think that contributes mightily to inflation? Another example. I just received a large shipment of aircraft parts with a $1500 freight bill. The same stuff cost 450 bucks to ship in 2020 before bidens crashing oil permits.
but per dippy’s analogy you have to assume that the cost of energy is also driven directly by the cost of food (at the same 60%).
and if you don’t play by dippy’s rules … you are an illogical nutter.
There is only one thing that produces inflation and that is government inflating the money supply faster than a countries supply of goods is increasing.
There is no such thing as cost push inflation.
When the price of one good goes up, people end up with less money.
Which means that they have less money to spend on everything else they want to buy.
This results in decreased demand for those other things.
Which results in the price of those other things going down.
On net, one good going up in price cannot cause over all inflation.
No such thing as cost push inflation? You also missed key elements of economics class. If the cost of energy and other costs go up, prices are bound to rise, regardless of the money supply.
The economy is a lot bigger than a few products.
A few things going up in price is not inflation.
Actually I did very well in my economics classes, and I have continued to study after graduating.
You arer saying prices rise because prices rise, which is silly
The privately owned but heavily regulated Federal Reserve Bank creates inflation.
Usually by purchasing open market Treasury bonds.
That gives US Treasury bond investors cash (created out of thin air) to buy brand new Treasury bonds.
The Fed is usually helping finance the Federal budget deficit.
But that policy has stopped since April 2022 to reduce inflation.
It would not surprise me if Fed policy reverses to Quantitative Easing again a few months before the 2024 election
Economic Logic is not erroneous logic
The general price level correlates well with the M2 money supply, not the cost of energy or the cost of shipping.
Did your company immediately pass on the higher transportation costs ($1500 versus $450) to their customers?
If your company could pass on higher costs with no consequences, then why would they wait for higher transportation costs to hike prices? Why not just increase prices anytime they feel like it?
If businesses could raise prices with no consequences
Strawman – where has ANYONE made that claim?
Not a straw man, it’s an example of taking an example to an extreme.
Richard is showing the absurdity of the claim by pointing out something else which must be true, for the claim to be true.
What is he “showing to be true”? He is arguing against a claim that nobody has made.
I’ll grant it’s possible I missed it – can you show me where someone claimed that companies can raise prices with no consequences?
You didn’t actually read my response, did you.
I did, but perhaps I’m not understanding: Are you saying that he is employing a reducto ad absurdum fallacy instead of a strawman fallacy?
I should have used hand puppets ans a free comic book for this audience
The myth is that businesses can pass on all cost increases with no consequences.
The myth is that businesses can pass on all cost increases with no consequences.
You keep saying that. I agree that businesses can’t pass on cost increases without consequence.
Now, can you please tell me who is making that claim? Exact words, please.
OK so the stupidest of the Richard Greene’s many personalities decided to take over this morning.
So if rising energy prices do not effect businesses, why have so many of the German energy intensive industries shut down??
If Hyper inflation is a myth, why did so many countries HAVE HYPERINFLATION?
Of course the answer is fiat “money” and the overspending of government, BUT causing the cost of required commodities to rise through regulation will also cause prices to increase. See electric rates and ff costs as examples.
So GOVERNMENT is the cause of inflation, and in the US, the creation of the Federal Reserve is the root of ALL current excessive government spending, and the cause of ALL inflation. Hell, they set 2% annual inflation as a GOAL.
But regardless, or irregardless, of all of that, higher energy prices WILL cause higher prices So will higher wages (minimum wage increase). A business must recoup it’s expenses or go bankrupt.
Nobody said that rising prices have no impact on businesses, he said that rising prices aren’t the source of inflation.
Nobody claimed that hyper inflation does not exist, just that inflation is not caused by rising prices, it is the result of rising prices.
One good rising in price will cause inflation in that good, but because consumers end up with less money to spend on other things, it will also cause deflation in other parts of the market.
The Fed does have a goal for inflation. They also have a goal for interest rates.
The problem is that these two goals are diametrically opposed.
There are two ways by which the Fed can finance the deficit. They can either borrow the money, or they can print it.
Borrowing money causes interest rates to rise, and printing money causes inflation to rise.
“higher energy prices WILL cause higher prices”
The general price level correlates well with M2 money supply with a lag of 6 to 12 months
The connection between money supply inflation and price inflation is logical and supported by data
The correlation of energy prices and general prices is not that strong. There are many examples of high energy prices and low inflation rate.
The price of oil reached $212 in 2024 dollars in 2008, yet the 2008 inflation rate was only 3.4%
Do higher energy prices caused higher general prices?
The events in 2008 are one example contradictory data.
As stated in the article, “Inflation is a monetary issue. It has to do with the money supply.”.
Right now we have too much money chasing too few products. It’s the biggest tax passed on to people that can’t afford it.
“Proces are increased by the people selling those goods and services. There are always consequences from raising prices: Fewer sales.”
Price increases could have an impact on discretionary spending but not to any great extent on consumer staples which are up about 20% since 1/20/21 while inflation adjusted wages are down.
YANGR
(yet another nutty greene rant)
Yet another stupid Three Card Monty response
Gee, Richard, energy is the base of the entire economy. Small thought experiment on loaf of bread: farmer buys fertilizer (NPK the first one made with nat gas, the other two mined) – both sources increase in cost if fuel/power prices go up significantly – and cost of its delivery, farm machinery fuel, too for planting, pesticides, harvesting – shipping grain to the Miller, milling, bagging, shipping flour to the baker, mixing, baking, packaging, shipping to city warehouses, distribution to retail stores, …. and when the farmer needs new machinery- mining, smelting, refining, manufacturing, shipping, handling retailing the now inflated cost of fuel/power inputs… sorry for the long story of energy inflation in a loaf of bread… now think of the energy inflation in your toaster, and the other hundreds of things you need or want.
If a farmer raises his prices he sells less. The price he gets is determined by the supply and demand for his food, NOT by his costs
Farmers have no control over the price of their production. They can’t raise or lower commodity prices.
What they keep dreaming is amusing and pathetic.
Scares the eggs out of me.
(Easter spin, sorry).
Huevos would have been better.
That would have gotten the Easter spin and a Spanish flavor with an awesome double entendre.
They should be linking the Net-Zero, anti-CO2 agenda to inflation. !
There is no way CO2 can affect inflation, without moronic policies stopping emissions of it.
CO2 does not cause inflation
Fear of CO2, apparently, seems to do just that.
. . . especially when that irrational fear of CO2, instilled in the President of the US, results in idiotic Executive Orders.
You are correct…CO2 doesn’t cause inflation.
CO2 does cause Oasification though.
The general greening of the biosphere and the spread of green plant life onto areas where it is currently lacking.
Hey Brandon, Climate Change isn’t driving inflation, you’re amazingly idiotic policies are though
The Federal Reserve has reduced inflation while Biden is president frm a peak over 9% in 2022 to 3.4%
The peak inflation rate, year over year, was caused by the Fed funding huge Trump deficits for the 2020 and 2021 federal budgets that had NO connection with Joe Biden.
The false underlying assumption is that warming, no matter how gradual, is bad or somehow forces prices higher. That’s utter balderdash. This is the same old, same old warmunists’ use of propagandistic assertions totally disconnected from reality and then claiming fake future impacts.
Warming is good.
Cooling is bad.
That’s how it’s always been for this planet. Our entire biosphere and oxygen-enriched atmosphere could not exist without warming or CO2.
They don’t even bother trying to show that there have been temperature increases in the various farming regions of the country. They just assume it must have happened because the models say it should be happening.
Considering that we’re in the interglacial period of an Ice Age, one would think that warmer is better. Unless some unscrupulous people can scare the feces out of the sheeple into believing that CO2 is bad and then proceed to make quite a few bucks on that fear by selling snake oil solutions.
Dumb article that replaces one economic myth with an older economic myth: “Energy inflation permeates the rest of the economy”
This is the clueless myth that rising prices cause rising prices.
Inflation is caused an expanding money supply, expanding faster than the supply of goods and services (Real GDP).
Rising M2 money supply also correlates well with federal budget deficits, except in years when the Fed is “fighting” high inflation.
If energy prices drove the CPI, then there would never be periods that rapidly rising energy prices were accompanied by a low inflation rate.
But there are such periods. 2008 would be an example.
Relevant M2 / CPI / Federal Deficit correlation charts are at the link below if the actual charts don’t show up here below that lnk:
The Honest Climate Science and Energy Blog: OFF TOPIC: Six Charts Connecting Fed Asset Purchases, Federal Deficit Spending, M2 Money Supply Growth and Consumer Price Inflation
Ah this would be another facet of your split personalities, then? Richard Greene the Economics Professor who knows more about economics than anybody else alive. It’s an absolute wonder to me that you’re not employed by a top bank or other financial institution. Sarc (I didn’t need it really, did I?)
Didnt need it.
(did u know that dippy has a website that has been viewed by thousands of people over the last 15 years. Top banks and financial institutions dont have to hire him … they get it essentially for free (but since he removed the girly pics his click volume has dropped by 38%)
I am aware although I’ve only visited it the once, just to check that the horror stories about it were correct.
I guess you missed the effect of cost-push inflation in your limited economics studies.
There is no such thing as cost-push inflation. Never has been and never will be.
As long as the money supply remains constant, when the cost of one product goes up, other products go down.
Cost-push inflation is a myth that left wing economists came up with in order to keep people ignorant of the true causes of inflation. Deficit spending by these same leftists in order to buy the votes they need to keep their party in office so that left wing politicians can continue to get rich from the public purse.
Why should anyone believe you when Jerome Powell says different?
In point of fact, it is well-known that rising prices (of goods) causes rising wages (the price of labor to produce those same goods).
Economics 101.
Now, you were saying something about “clueless” . . .
What role does the stock market play in inflation? If common stocks rise in value on an average, or IPOs that raise billions of dollars, or companies that are sold for billions, there’s a possibility that the profits on these sales will be used to buy and drive up the prices of yachts, BMWs, Rolex watches and caviar. An argument could be made that if no new money has entered the economy, it’s just been redistributed, just as it was before the first central bank was created, the Sveriges Riksbank in 1668 in Stockholm.
The stock market plays no role in inflation.
A share of stock is a commodity like a pork belly and goes up and down in price. Ordinarily when a share is sold it goes for more than it did when purchased. That’s why shares, and pork bellies, are traded, to make money. Ergo the seller has more money than he paid for the share, money, in fact, that he received for doing nothing, which is what investing is all about. Being an integral part of the economy, shares of common start can’t help but have a role in inflation that’s seldom mentioned.
For many years, Forbes Magazine published, annually, the Cost of Living Extremely Well Index (COLEWI).
Climate Change: What can’t it do? Simultaneously the excuse for the consequences of bad Progressive policy, and the justification for more bad Progressive policy.
Only the wealthy developed countries that represent about 6% of the 8 billion on this planet have expensive and occasional electricity from wind and solar. The other 90+% of the population of the world, of which more than 6 billion are living on less than $10 a day have virtually nothing.
So, borrowing and spending trillions of dollars and driving up energy costs has no effect but a very minor increase in nighttime temperatures causes inflation? Who knew?
How about we just “go along to get along” and just state for the record “Yes, EVERYTHING now experienced by humans as being negative is related to climate change™.”
I don’t know about you, but this would greatly simplify my life by (hopefully) silencing the uninformed alarmists.
/sarc off
After all, such a statement in no way affects the objective FACTS as to what is happening in the real world.
You can easily replace the UN Secretary General with that philosophy.
Did anybody look at the study?
GHG emissions cause droughtfloods (sic), and extreme weather… IPCC RCP8.5 models say so.
– – – – – – – – –
Global warming and heat extremes to enhance inflationary pressures
Climate impacts on economic productivity indicate that climate change may threaten price stability.
https://www.nature.com/articles/s43247-023-01173-x
Let’s ignore all the new government rules that are making it more expensive to farm.
No, if prices are going up, it must be because of climate change, no other answer is acceptable to the collective.
Let’s ignore all the new government rules that are making it more expensive to farm.
Like Oregon suddenly requiring anyone “farming” 1/4 acre or more (i.e. a large family garden) to apply for water rights permits?
I would be very careful to make sure that my veggie garden was only .249 acres.
If governments, academics and insurance companies, among others, continue to seize the opportunity to blame climate change for almost every adverse occurrence, why wouldn’t they use it to explain inflationary trends. Except in many ways they’re correct because they use it to justify higher environmental taxes, rising premiums and new laws and restrictions, which drive up living costs while generating more revenue. Whether these will do anything to arrest the so-called “climate crisis” is debatable, but consumers should expect more of the same if they keep electing left-leaning governments.
Inflation… it’s Trump’s fault, it was the pandemic, it was Putin, it’s corporate greed, it’s the Republicans, it’s climate change.
This reminds me of Jake’s excuses in The Blues Brothers… “Honest… I ran outta gas. I had a flat tire. I didn’t have enough money for cab fare. My tux didn’t come back from the cleaners. An old friend came in from outta town. Someone stole my car. There was an earthquake, a terrible flood, locust’s. It wasn’t my fault!! I swear to God.”
But there is a link between Climate Change and inflation. If you pursue the fantasy of Climate Change remediation, you will overspend with money you don’t have and inflation will go wild.