Chemtrails and the "Weather Derivatives" Market

In his paper ‘Why in the World Are They Spraying?‘, journalist Michael Murphy floats the idea that chemtrails are sprayed in order to manipulate the weather derivatives market.

He posted the story at TheIntelHub.com on Oct. 11, 2011. It ran alongside my article ‘Chemtrails Exposed‘.

He may not be too far off the mark as my humble investigation leads me to many questionable situations, strange bedfellows and none other than those legends of corruption and waste, Enron. The thoroughly disgraced and vilified corporation was one of the founders of the market.

Would you put it past Enron?

Overview:

Weather derivatives are financial instruments (options, futures and options on futures) everyone can buy that either pay off or don’t pay off according to recorded atmospheric conditions such as temperature and rainfall. These instruments are mostly traded on the Chicago Mercantile Exchange (CME). They are also traded on smaller Over the Counter (OTC) markets.

Atmospheric conditions are recorded and published by authorized organizations.

Although they are available for frost, snowfall, rain, wind speed, and many others, the most common type of weather derivative by far is based on temperature. According to industry experts, temperature-based weather derivatives account for 75-99% of all weather derivatives sold.

This is how temperature-based weather derivatives work. Indices take a location’s daily average temperature, then a number is determined by how much that day’s average temperature deviates from 65 degrees Fahrenheit (or 18 degrees Celsius outside the U.S.).

The number deduced determines the derivative’s value and is usually aggregated over a period of weeks, months or seasons. Other indices simply aggregate average daily temperatures. In short, the day’s average temperature determines the derivative’s value.

You can bet that temperatures will be above or below the long-term daily average for a particular date or group of dates.

The first weather derivative transactions were conducted over the counter in 1997 between Willis Group Holdings, Koch Industries, Pxre Reinsurance Company and Enron. These transactions followed the deregulation of the energy market in the U.S.

The weather derivatives market was greatly expanded in 1999 when weather derivatives began trading on the Chicago Mercantile Exchange.

The Weather Risk Management Association (WRMA) was founded in 1999 as well and is the leading industry association.

The founding members were: Aquila Power Company, Castlebridge Partners, Enron Capital and Trade Associates, Koch Industries, Southern Company Energy Marketing, and Swiss RE New Markets.

This year (2011), the WRMA released the results of a survey which pegs the current global weather derivatives market value at about $12 billion.

USA Today reported in its article ‘Weather Derivatives Becoming Hot Commodities’ that the largest broker of weather derivatives in the world is TFS Energy.

A man named Kendall Johnson, who is described as one of the industry’s most powerful professionals, states, “Businesses in the U.S., Japan, London and Amsterdam are the most frequent users of weather risk management, though companies in emerging markets like India are beginning to trade weather derivatives.”

Other big corporate players include: British Gas, Hess Energy, ABN Amro, Merrill Lynch, AXA Re, Swiss Re, Koch Energy, RenRe Energy, Nephila Capital, Munich Re, Speedwell Weather Derivatives, Vyapar Capital Market Partners, Galileo Weather Risk Management, PCE Investors / Cumulus, EDF Trading Limited, Risk Solutions International, E.ON Energy Trading, Mitsui Sumitomo Insurance Company and Endurance Reinsurance Corporation of America.

As you can see, re-insurers are some of the biggest market players. Geoffrey Considine, Ph.D. (a high profile weather derivatives industry insider) writes in his paper ‘Introduction to Weather Derivatives’, “There are a number of drivers behind the growth of the weather derivative market. Primary among these is the convergence of capital markets with insurance markets.”

Swiss Re is a name that comes up repeatedly and just happens to be the insurer of the World Trade towers at the time of the 9/11 attacks. But, I’m sure that’s just a coincidence. Nothing to see here… move along.

Enron:

By all accounts, Enron concieved and initiated the weather derivatives market.

According to ‘Weather Derivatives’ by authors from the London School of Economics, the Swiss Finance Institute and the University of Geneva, “…electronic trading platforms have always played an important role in the development of the market, especially Enron’s platform in the early days.”

Enron initiated the weather derivatives market in Europe as well. According to ‘Weather, Finance and Meteorology – forecasting and derivatives’ by Samuel Randalls, “In the UK, the first weather derivative deal was sold by Enron to Scottish Hydropower who, at that time, 1998, were taking part in a government pilot scheme for the privatization and deregulation of energy markets.”

In regards to Enron’s weather derivatives division known as ‘Enron Weather’, one of the co-authors of the book ‘Enron: The Smartest Guys in the Room’, Bethany McLean wrote me that, “A guy named John Sherriff was pretty instrumental in starting it, but the woman who ran the business, whose name was Lynda Clemmons, ended up leaving for a reinsurer – can’t remember the name of it – long before Enron’s bankruptcy.”

Lynda Clemmons now works as an advisor at Vyapar Capital Market Partners; a big weather derivatives player. John Sherriff is now the owner of Lake Tahoe Financial.

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