Profiting from the heat wave

Temperatures have been on the rise worldwide, creating revenue opportunities for utilities and beverage makers.

By Kim Peterson Aug 10, 2010 1:44PM
Heat wave © David Gould / PhotographerHoo boy, it's hot outside. And that means big money for some companies that profit when the temperature soars.

The heat wave hasn't just affected the U.S. So far this year, temperatures worldwide are the highest since we began measuring them 130 years ago, the Financial Times reports.

So who sees a revenue spike when things heat up? The most obvious companies are the utilities. Over the past month power consumption in the U.S. is up 10% from a year ago, the FT reports.

Wall Street traders bet on just about everything, even the weather. The Chicago Mercantile Exchange trades futures of "cooling degree days," and the traders and meteorologists involved think the summer heat will continue, the FT reports.

Cooling degree days are a way to anticipate air conditioner demand, and so far CDDs have been higher this year for major U.S. cities. These futures are 21% and 13% higher for August and September, the FT reports.

Cool beverage makers also benefit from toasty weather, so it will be interesting to see how Coca-Cola (KO) comes out this quarter. Beermakers also win, but this isn't a normal year for brewers as a drought in Russia has caused barley prices to spike, according to the FT.

Things could be worse, though. In the U.S., several factors are working in our favor even as the temperature has climbed:

Hot summers have threatened the reliability of America’s power infrastructure in the past, most recently in 2003 and 2005, but a tepid recovery has helped utilities keep loads in check. Meanwhile, natural gas producers have been saved from a ruinous glut. And well-timed rains have supported abundant cereal crop harvests, allowing US agribusiness to sell into receptive export markets.

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