Oil Consumption Impacted More by Price than Deteriorating Economic Conditions

The fall in oil consumption was most dramatic following the escalating price of crude oil to $145.16 per barrel on July 14, 2008 then at any other point over the last several years. Price elasticity, a key concept in Economics 101, which measures the impact of price change to changes in unit volume sold, is helpful in determining which products have readily available substitutes or which, like oil are inelastic with no real substitutes.

As illustrated by Benjamin Graham and David Dodd in their book Security Analysis, 1940 edition, during the 1930’s the economy had a dramatic impact on spending and consumption particularly on discretionary items such as travel. In one illustration, the change in demand was most pronounced in railroad revenues where tickets purchased for railroad travel, declined 51% from 1929 to 1993 as measured by gross receipts for the railroad industry. Over this same period, spending on the consumer staples (inelastic demand), such as electricity encountered a decline of only 9%.

While almost everyone would agree that the current economic climate is one of the most challenging since the 1930’s, a quick review of oil consumption over the last several years illustrates that demand has not significantly contracted, suggesting driving habits only changed when prices escalated to over $100 per barrel. Oil consumption dropped only 4.9% from January 2008 through January 2009.

Figure 1 Oil Consumption Oil

As seen from Figure 1, the sharp drop in oil consumption in September 2008 of 8.3% appears as an aberration when measured over the whole year. The fact there are no real substitutes for oil in the transportation industry illustrates two important points: 1) structural changes to driving patterns are required to see appreciable changes to oil consumption and 2) how vulnerable we are as a nation with no readily available substitutes for oil in the transportation systems.

Figure 2 Oil Demand in China and India Wood Prices

With China and India undergoing significant structural changes as they rapidly migrate towards motor vehicles for transportation suggests the demand for oil should continue to grow relatively unabated. Until the price of oil climbs back over $100 per barrel, we will not see the structural changes necessary to develop alternatives to oil in the transportation market.

The bottom line: energy and in particular, oil has not experienced a dramatic drop in demand during 2008 suggesting driving patterns were influenced more by the price of oil then the struggling economy. We must begin to shift emphasis to alternative energies such as solar as well as hybrids and electric vehicles.

Here is the original: Green Econometrics

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R-22 Phase out January 1st, 2010

Cooler Connection

January 1st is just around the corner. Now is the time to start preparing for the R-22 refrigeration phase out. Starting in 2010, manufacturers can only produce R-22 refrigerant to service existing equipment. All newly manufactured units will use an alternate refrigerant.

Important Things to know about the R-22 Phase Out

The phase out of the ubiquitous R22 refrigerant gas changes many things for the consumer. If you need to know more about the phase-out, you should read the following pointers.

1) In the United States, there are regulatory bodies like the EPA that have laid down strict guidelines with regards to the regulation and maintenance of refrigerant leaks. The Montreal protocol and the Kyoto protocols have been initiated on an international level to regulate similar parameters. These protocols are being put into place to regulate the repair of refrigerant leaks and the disposal of older machines that use such refrigerants.

2) The refrigerants used in most refrigeration and climate control systems internationally are known as HCFC. Most of them have varying levels of ODPs, better known as ozone depletion potential.

3) R22, also known as HCFC22, was initially introduced as a substitute to CFC 11 and CFC 12. These two gases could cause a very high level of damage to the ozone layer.

4) R22 has an ODP of 0.055, which is significantly lower than both CFC 11 and CFC 12. However R22 is being phased out amongst concerns about the effects that even it can have on the environment.

5) The replacement for systems that use R22 will be other systems using R410A and R409A. These refrigerants are known to have a lower potential for ozone depletion.

Source: Air Options LTD

Cooler Connection @ Cooler Connection | U.S. Cooler BlogSource: Cooler Connection

Conservatory Lighting

Toby Frost asked:

Conservatory lighting.

While every room in your house can be described as having a colour, what colour is your conservatory? You may answer that it is white, or a stain colour but really, for most people the colour of your conservatory is green or, the colour of your garden because that is what you can see through all of the glass. This relationship with the garden is clear and the main reason that people love being in their conservatories during the day.

Inside lighting;

Inside your conservatory during the day natural light will be coming in from outside creating a wonderful view of your garden and giving a light and airy room. At night the situation reverses, with any inside light being reflected back into the structure if it is dark outside. You will also notice that if you have double glazing then you will actually have two reflections of the light (with triple glazing you will have three) This can be a feature that you can take as an advantage; during the festive season a string of lights hung in the rafters will cast double or even triple reflections back into the room looking like a fabulous starry scene. Unfortunately most of the time these reflections are not as dramatic. One way past this problem is to properly light your garden as I will discuss later, sensible lighting within the conservatory will also minimise this light pollution. When lit as other rooms in the house, with a hung light at a high level you will be lighting everything in the room maximising the amount of reflections. What is needed is low level lighting, illuminating what is needed, minimising reflections. A lighting ring can easily be used for lamps, with a number of points at a low level switched as normal by the entrance. This gives all the advantages of low level lighting with the convenience of switched lights.

Outside lighting;

One problem that does have to be remedied is that once it becomes lighter inside the conservatory (at night) the ‘colour’ of the conservatory changes as you will be looking at a reflection of yourself in the glass. The conservatory has become introverted where it was extrovert during the day.

The answer is to light your garden at night so that it is once again lighter and becomes the view from the conservatory again. Having the switch for the outside lights in the conservatory is an ideal place as you have control in the place where you want it. Also, look at the colour of outside lighting, you are best to think of what to light in January as in July you can cast a light on anything and it will look nice as everything is in full bloom and growth. January is the time when most plants are dormant but you will still need to light it to get maximum use out of your glasshouse. In general this means architectural features that stay year-round such as tree trunks, walls, fountains, ponds and hedges. It is common sense to light using similar a colour so that they look natural at night so green light for plants and blue lights for water features. A red light on a green bush at night will reflect little light and produce a dark red bush that will look unlike the naturally lit form.

When the lighting is thought about, a conservatory can be an equally stunning place to be at night as during the day and a place that you will spend more and more quality time as the seasons pass.

The New Light @ The New LightOriginal post: The New Light