Oil prices have gyrated with the violence in Gaza and Israel, the improved economic outlook for China, and the prospect of a tax deal in the US. But they have remained relatively low, which may be in part because China has paused its diversion of tens of millions of barrels to fill its strategic petroleum reserve.
This supply-driven price moderation means continued breathing room for US and European economies. It is also a working illustration of two of the 10 indicators that guide us to geopolitical trends: Energy supply (Indicator no. 5) and price (No. 1) are potent drivers of geopolitics, so when we see a shift in how much oil and gas is available, or how much it costs, we are alert for impact elsewhere in the world.
Today we add an 11th indicator: extreme weather.
We don’t do this casually. The original indicators have helped us grasp the potential for a far-flung chain reaction from the apparent greater frequency of extreme weather events such as storms, flooding, drought and fire. Indicator No. 2 (transportation), for example, captures the opening of northern sea lanes because of melting ice. Public opinion (No. 6) and local politics (No. 8) cover the general public ambivalence toward a binding global treaty on carbon emissions—they tell us why do not see global leaders act to possibly hold down the worst future impact of climate change.
But these indicators do not seem sufficient. Climate change seems to be a different animal from other energy events, and by extension so is extreme weather. With the original indicators, we have direct guides of potential geopolitical impact. To quote another forecaster, they help us to separate the signal from the noise. But in the above examples, we find climate change—extreme weather—guiding us not to geopolitical impact, but to other indicators: transportation, public opinion and local politics. These are incomplete indicators of potential geopolitical and geo-economic impact. Extreme weather is much bigger than that—it itself could potentially wipe existing nations off the map; invigorate others; create unsurvivable swaths of the Earth, and new, thriving lands from currently inhospitable ones. It could utterly undermine widely embraced GDP forecasts for China, the US and Europe.
All the indicators can affect one another. But extreme weather seems to have an outsized potential—it is a necessary indicator for grasping our potential geopolitical future.