The co-movements of climate risks and energy price, production, and consumption indicators in the US

Purpose The purpose of this study is to examine the specific relationships across various forms of climate-related events and assorted segments of the energy market in diverse geographic regions in the US. Design/methodology/approach Numerous wavelet coherence analyses inspect the co-movements of 15 key energy economic indicators (average price, production, and consumption estimates of oil, gasoline, coal, electricity, natural gas, renewable energy, wood and biofuels) and diverse climate-related events (temperature-related, precipitation-related and wind-related incidents), in 12 US states (in the Gulf Coast, the West Coast, the East Coast, a Southern Plains state and a Pacific Islands state), and along 53 years, from 1970 until 2022. Findings This study’s tests have repeatedly uncovered periodic though robust co-movements of energy price, production and consumption indicators and extreme weather incidents that continued for a number of years at a time. Many of the co-movements detected are well synchronized, where in various instances, severe weather episodes led the progressive changes in energy indicators. Research limitations/implications Although robust association is established, no causality is declared. Practical implications Regulators, policymakers, investors, rating agencies and predominantly energy market participants can extract valuable insight from the empirical evidence found concerning different states, geographic areas and types of climate events. Originality/value This study examines the miscellaneous relationships through a granular approach by isolating particular regions and states in the US, different types of climate events and risks, and diverse forms of energy indicators. It contributes to stakeholders in this realm by identifying specific weather exposures and thus guide protective measures suitable for unique circumstances.