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Week of 18 May 2020: More Energy Trend Problems

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This month, I have been telling you, when it comes to energy trends, what you do not control you cannot predict. Thus, I have been admonishing you to know what you control, control it, and then miserly buy what other energy you may need.

I thought I would give you a couple of examples, one new, one old, demonstrating energy matters you cannot predict.

In some parts of the world, here in the Spring of 2020, things are starting to open up and people are going back to their working environments, forsaking working at home, either voluntarily or mandatorily, depending on their employer and local regulations in place. There are reports as widely scattered as Berlin and Shanghai that automobile traffic is up sharply. It is way up from the time before the Covid-19 shutdown. Why? People do not want to ride mass transit. Hence, they are driving themselves or riding in carpools that contain very few people, known to them.

Well, this will put a zip in gasoline demand in short order. Then there is the other side of the coin. We travel down the road eight to ten months; a vaccine is found and the perception of becoming infected in public places is viewed as very low. Mass transit is in vogue again. You, in your paper mill in Mahookia, had absolutely nothing to do with these attitudes in far off places. Yet, you will feel it in the prices you pay for fuels. Alert--you are not in control. Only deal with energy sources, to the highest extent possible, that you can control.

The other story I will tell on myself. When I graduated from university in 1973, I continued to work at the same place where I had had a co-op assignment for 3 ½ years. That fall the first ever oil crisis hit. In a matter of a couple of weeks, gasoline rose about 50%. Now, due to opportunities available to me through my family, I owned a house about 25 miles from where I worked. Not an easy 25 miles--straight though Cincinnati, Ohio. I drove an older car with not very good gas mileage (none of them had good mileage in those days). Fifty miles a day of city driving--in a car that probably got 12 miles to the gallon. I was very aware of gasoline prices.

December came and we received our annual raises. My raise did not cover my increased gasoline cost in the fourth quarter of 1973 as compared to the third quarter of 1973. Just out of school, money was tight. I was a young engineer, not firmly set in the direction of my career just yet. I started scouring the employment advertisements in the newspaper (yes, that is where we used to get a job, today I recommend with the sole objective of finding a decent job, with the primary consideration being that it was closer to where I lived so I could cut my commute. That search led me to Procter & Gamble, which cut my commute by 2/3rds and, coincidentally, led me into the pulp and paper industry.

So, sitting there in your mill, you have no idea and no control over what people may be doing that affects overall energy prices. Yes, learned professionals can give you nice graphs that may possibly show you an accurate prediction out in the future, but they can not tell you what you will be paying for energy in July of this year.

Control what you can control. Minimize what you cannot. You will be ahead of your competition.

For safety this week, desperate times often lead to desperate measures. If you are doing something abnormal in energy consumption or storage, make sure you have your safety situation assessed and the proper protocols in place.

Be safe and we will talk next week.


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