The recent swings in the spot price for crude oil — especially in light of the currently rapid rising spot prices are cause for alarm. Noting that the current run up of prices looks a lot like period leading up to the sudden price spike that occurred in the summer of 2008. It goes on to argues that the global economy needs a better market regulating mechanism that can help manage these swings and reduce their amplitude so they become less damaging to the world’s economies. The energy business — whether it is alternative energy or oil, gas or coal exploration and development — has huge up front capital needs. This needed capital is much harder to raise in a climate of such extreme near term price uncertainty.
Last month, the Securities and Exchange Commission (SEC) instructed publicly held companies to “…consider the effects of global warming and efforts to curb climate change when disclosing business risks to investors.” One significant ramification of this SEC action is that CFOs will now need to take the initiative in identifying and reporting the risks that climate change may have upon their company’s investors. This is a sea change in CFO fiduciary responsibility.