A Message from Our CEO: Managing A Tough Winter Together
“A MESSAGE FROM OUR CEO,” an occasional feature from Michael DeBerdine III. These features will explains the challenges facing the home comfort industry and presents solutions for our customers.
You have probably been hearing the news about rising energy costs — and seeing higher prices at the gas pump. At Rhoads, we continually monitor the global and regional energy markets so we can plan and react to help our customers.
While the media is now beginning to cover this story, the signs have been apparent for several months to those of us watching carefully. Natural gas prices have risen 400% on the wholesale market this past year. Electricity prices have skyrocketed in Europe 360% during 2021. Crude oil has moved above values we have not seen since 2014.
GLOBAL ENERGY CHALLENGES: HOW WE GOT HERE
If you understand why this is happening, you can begin to understand what factors are out of our control — and the importance of taking steps to manage your energy usage this winter.
This past year, a series of unprecedented circumstances unfolded before our eyes:
- The pandemic shutdown production of most energy sources when the economy came to a screeching halt in March of 2020.
- The recent cold winter in Europe left the region short in natural gas supply by the end of the 2021 winter.
- Wind-power in Europe could not keep up due to low wind currents, thus a need for supplemental energy sources, which was already in short supply.
- China energy reserves are so low. They have instructed their energy procurement team to “pay whatever it costs” to obtain energy sources for this winter.
- The U.S. is now a major exporter of energy products, so the ultimate product now goes to the highest bidder.
- And finally, the world-wide economy is heating up very fast with stimulus money and pent-up demand.
To compound these facts, there is a labor shortage and supply-chain challenges (how we get products delivered) everywhere you look. For instance, there are over 500,000 containers floating on ships off Los Angeles ports. There presently is not enough workforce to handle the influx of products being shipped into our ports. Demand is outstripping supply everywhere you look, including the energy sector.
This sounds like a “perfect storm”: a bad situation when multiple factors come together all at once to create a significant event.
THE FACTORS WE CAN CONTROL
While we may be living through a “perfect storm” affecting our global energy, we firmly believe this will be an intermediate challenge. Countries are doing their best to safeguard their citizens before the impending winter in the Northern Hemisphere. But until we get through the next six to twelve months, it could be a little bumpy.
In the meantime, there are steps we can all take. At the Rhoads Energy Family of Companies, we purchase contracts for fuel throughout the year, helping us to smooth out price hikes and soften the blow to our customers. We have also expanded our storage capacity for heating oil and propane to ensure plenty of supply to get you through the winter.
At home, there are steps you can and should take. Do everything possible to reduce your energy consumption: seal your home, get the recommended annual maintenance for your system, invest in a smart thermostat and sign up for budget and automatic delivery.
If you have an older system, consider upgrading to a new, high-efficiency heating system. This upgrade could cut your fuel usage significantly this winter – and for many winters to come.
Remember: all storms eventually subside, and the current “perfect storm” is no different. On behalf of our team, thank you for entrusting us to serve your heating and cooling needs.
Michael DeBerdine, III
CEO, The Rhoads Energy Family of Companies