Saturday, December 10, 2005

Just the beginning of the peak: Energy and Economy

The reality of energy is starting to kick this country in it's collective nuts. The closing of factories due to energy costs is scattered for the moment but it will intensify. Imagine our economy and our way of life as we begin to experience shortages.

Vicki Lee Parker writing for the North Carolina news paper discusses what happens when The News & Observer energy costs hit N.C. manufacturing plants:
"This winter, hundreds of manufacturing employees across the state will head to the unemployment office. Among them will be at least 150 workers from the Pine Hall Brick company.

For the month of January, the Winston-Salem company will shut down half its production, chief executive Fletcher Steele said.

The culprit: high energy bills.

Since hurricanes Katrina and Rita disrupted the gas supply, Pine Hall Brick's monthly gas bill has doubled.

In August, the company paid $700,000 for the natural gas it uses to power the kilns that heat the raw materials used to make the bricks, Steele said. In October, the bill was $1.4 million. 'It shocks a lot of people,' he said. In 2001, Steele said, the company was paying just $200,000 a month.

Although gasoline prices at the pump have gone down in recent weeks, natural gas is a different story. Utilities across the state raised their rates to record levels after hurricanes destroyed processing plants and pipeline facilities in the Gulf of Mexico. The spike in prices has led companies to lay off workers, increase their prices or both. Consumers will eventually feel the effects as companies push the costs down the supply chain.

Nationally, nearly 45 percent of manufacturers say high energy costs will cause them to lay off workers or impose wage freezes or cuts, according to a new survey by the National Association of Manufacturers. About 200 companies responded to the survey.

Writing for the U.S. News and World Report, Marianne Lavelle also discusses the coming winter fuel crisis.

Yes, we have a problem. We really do. Not only will prices continue to rise they will rise to such a degree that many people in the northeast U.S. will have to make choices between food, medication, and heating. We're likely to see shortages in one or several fuels. This will not go away... it will get worse. We only have one way to go with this. Are you ready?

I laugh when I think of Bush and Co. suggesting that our way of life is not negotiable. Really? Seems to me that reality is negotiating a new way of life this winter. Funny thing, reality... sometimes it kicks us in the face.

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