Peripheral vision

Five developments that caught my eye:

New England faces winter energy crisis

“Utilities and industry analysts estimate it will cost families 30% to 50% more to heat their homes with natural gas this winter,” the Wall Street Journal reports (18 July 2008). Worse: Families using heating oil — such as in New England — could face increases of 50% to 100%. People may end up paying $5 a gallon for heating oil this winter, a 72% increase over last year’s price, according to the Oil Heat Institute of Long Island.

It’s no longer just a problem for the elderly and poor; this time it will be a middle-class phenomenon, too. A colleague of mine (located in New Hampshire) says many New Englanders are just scraping by, paycheck to paycheck, and can’t afford the oil price hikes. They’ll resort to using kerosene space heaters, in unsafe ways. As a result, “some people will die this winter,” he predicts.

Heating oil sticker shock to hit New England

Rubbermaid sees its future as innovation + premium prices

Newell Rubbermaid Inc. plans to trim its product line — eliminating low-end plastic storage containers, trash cans and office chair mats — in favor of high-end, innovative products. The company “plans to invest more heavily in research and advertising for more-innovative products,” according to a Wall Street Journal article, aptly headlined: “Rubbermaid Wants to Be Less of a Commodity” (16 July 2008). The innovative products include containers for fruits and vegetables with vented lids to keep those foods fresher.

The primary reason for trimming the low-end of the product line is the rising cost of the petrochemical-based resin used for making plastic products.

Continue reading “Rubbermaid sees its future as innovation + premium prices”

Railroads make eco-friendly comeback

Is the horse-drawn carriage next? It’s 2008 and the once-dying freight railway industry is “enjoying its biggest building boom in nearly a quarter century, a turnaround as abrupt as it is ambitious,” gushes The Washington Post ( 21 April 2008 ). The boom is “largely fueled by growing global trade and rising fuel costs for 18-wheelers,” the article says. However, with the boom comes a concern about a return to the robber barons (and anti-competitive pricing) of the 1800s. Excerpts:

In 2002, the major railroads laid off 4,700 workers; in 2006, they hired more than 5,000. Profit has doubled industry-wide since 2003, and stock prices have soared.

This year alone, the railroads will spend nearly $10 billion to add track, build switchyards and terminals, and open tunnels to handle the coming flood of traffic. Freight rail tonnage will rise nearly 90 percent by 2035, according to the Transportation Department. [Actually: 88%.]

[T]he changing global market has fueled prosperity — and the need to add track for the first time in 80 years. Soaring diesel prices and a driver shortage have pushed freight from 18-wheelers back onto the rails. At the same time, China’s unquenchable appetite for coal and the escalating U.S. demand for Chinese goods, means more U.S. rail traffic is heading to ports in the Northwest, on its way to and from the Far East.

The zeitgeist has even dropped a “green” gift in the industry’s lap. A train can haul a ton of freight 423 miles on one gallon of diesel fuel, about a 3-to-1 fuel efficiency advantage over 18-wheelers, and the railroad industry is increasingly touting itself as an eco-friendly alternative.

But rail customers are complaining about the kind of price-gouging not seen since the robber barons of the 1800s, leading to antitrust suits and calls for re-regulation of rail prices. The rail industry counters that it’s using the same kind of “differential pricing” that airlines use today (i.e., higher prices where they have market power).

Railroad news: Shippers say lack of antitrust enforcement hindering rail competition

The price of rice is sky high

The global commodities boom that has lifted prices of everything from gasoline to gold is now elevating the price of rice — a staple food for half of the world — to its highest level in nearly 20 years. The ubiquitous grain is suffering from poor harvest and tight supplies, just as demand grows in places such as India and the Philippines. The price hikes are a boon to some farmers and investors, but the food-price inflation could widen the rift between the world’s haves and have-nots. — The Wall Street Journal (15 December 2007)