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By Philip Elliott
LAST YEAR, THE U.S. EXPERIENCED
20 weather and climate disasters that
each caused more than $1 billion in
damage, from tropical storms in Flor-
ida to drought in the West, according
to federal data. Those costs include
things like destroyed buildings, but
the economic implications of such di-
sasters extend much further. Beneath
the headlines about supply-chain
challenges, extreme weather events
tied to climate change are contrib-
uting to the most significant infla-
tion in decades. Across the world,
climate-linked disasters have killed
crops, disrupted energy supplies, and
snarled transportation—and in turn
driven up prices.
One of the clearest examples of
climate-related infl ation came in the
wake of a winter storm in Texas in
February 2021 that shut off power
for days for some in the state. Across
Texas, natural gas pipelines ill
equipped to handle winter weather
went offl ine. This forced Gulf Coast
petrochemical refi neries—which
produce three- quarters of the coun-
try’s basic chemicals—to temporar-
ily stop production. These chemicals
are used to make everything from
soda bottles to car bumpers. In the
wake of the freeze, the U.S. lost 28%
of its shipments of chemicals by rail-
car, and prices of basic chemicals rose
Climate Is Everything
By Justin Worland
SENIOR CORRESPONDENT
dramatically, according to the Dal-
las Fed. That chemical shortage in
turn contributed to shortages across
a range of industries, as well as price
increases that were passed along to
consumers. By mid-April, production
had recovered—but prices remained
high through the end of the year. The
list could go on and on: cold weather
harming orange crops in Florida, tor-
nadoes destroying grain and poultry
facilities, and lumber facilities shut
down amid wildfi res. All of these can
lead to higher prices for consumers.
The link between climate change
and infl ation doesn’t stop there. The
trillions of dollars in spending needed
to transition the world away from fossil
fuels is bound to shape future infl ation,
and a debate has emerged about the ef-
fects. A 2020 report from the European
Central Bank argues that central banks
can manage the eff ects of climate pol-
icy on infl ation—so long as the transi-
tion is “orderly.” The clock is ticking for
the policymakers to deliver.
A worker harvests oranges at a grove in Fort Meade, Fla., on Feb. 1
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