George’s Corner: May 2012

Something is going on with our climate.

Is it de facto climate change as some argue? Or is it just a historical continuation of what has happened in the past and we are just re-adjusting to past climatic events? There are experts on all sides of this discussion. I don’t know who is really right or wrong. After all, how often is the weather person on television really correct in forecasting weather? However, I am inclined to believe the government climate specialists who say the world is warming up fast.

Heck, this past winter I didn’t even need to wear my Toronto Maple Leafs toque. Then again, maybe this was more due to shame. The winter of 2011/2012 was undeniably a warmer winter. The bottom line is that the weather we are experiencing today is not the weather we are traditionally used to in Canada, and it is wreaking havoc with business.

Nationally, climatologists are predicting future temperature increases with warmer winters and summers with evenings warming more than days. We are already realizing some of this across the country.

We are now officially into spring 2012 and as a propane marketer, based on my propane volumes, I can tell with certainty that this winter was warmer than last year and certainly the year before that. Customers didn’t need the heat they would habitually purchase. Technically speaking, energy providers of oil, natural gas, propane and electricity experienced fewer heating degree days. More energy degree days accumulating over the heating season results in greater demand for energy to heat our homes, businesses and construction projects. I even had one customer call me four days before last Christmas to tell me he was laying sod in a Toronto condo development. Many concrete contractors decreased demand for temporary heat on site because it was warmer. All of this adds up to loss of business.

With the summer approaching, climatologists are predicting higher than average temperatures so that we can expect, in technical terms, more cooling degree days, which will result in a greater demand for using cooling in our homes, businesses and work sites.

Put all of these predictions and changes into our business strategic planning processes and I can tell you that many of us will have to change the way we are going to execute business in the very near future. I know some building contractors are already planning to make changes in the type of equipment they plan to buy or rent.

Construction heater rental and sales in at least the southern portions of Canada will be cut back because they are temperature-driven purchases. And no one wants to take the chance on warehousing items that won’t be used. There is no profit in that. Neither will the sales of natural gas, propane, oil and electricity continue to increase at previous rates if the winter of 2011/2012 is repeated. Infrastructure and increased investments in these energy sectors will be reduced, and economic activities traditionally associated with them will be greatly reduced, in turn impacting secondary construction and employment.

Conversely, new products such as portable air conditioning may proliferate to meet the new cooling demands of warmer springs, summers and even later autumns where higher temperatures and humidity will become an issue for comfortable daily living.

Manufacturers and marketers of both fuels and associated products will need to follow climate change more closely. Accordingly, equipment distributors will have to rethink what to order and when to meet new seasonal demands affected by climate change. Equipment manufacturers and marketers will have to re-examine and potentially re-allocate sales staff and product warehousing to different areas or regions to accommodate differing product demands.

I predict a paradigm shift in marketing energy and equipment using all fuels. It is foolish to disregard the socioeconomic impact of climate change. For those who doubt me, just think of our last winter and how it affected your business. I don’t believe this winter was an anomaly; it is a harbinger of things to come. Climate change will necessitate economic change. Hold on to your toques!