Signs of the Times - June 2014 - (Page 14)

Te c h no lo gy U p date By Darek Johnson Should You Raise Your Prices? Darek Johnson is ST's Senior Technology Editor/ Analyst. Email him at darek.johnson@ stmediagroup.com Rising fuel costs affect operating costs and the price of plastics; also, will steel prices rise? As gas-pump prices continue to increase, and IBISWorld forecasts steel price hikes, should signmakers consider raising their prices? "L ower gas prices predicted for 2014" read the January 9 Hamilton Journal-News headline, where writer Brian Kollars' lead paragraph said "The cost of filling up at the pump is expected to drop this year, experts say, while Ohio drivers can expect more of the dramatic gasoline price spikes and dips that have been commonplace in recent years." Most of us measure oil costs at the gas pump. We think in unleaded gallons, not barrels of tight or sweet oil. We also easily forget that oil prices affect plastic prices, and fuel's price effect on delivered goods and commodities. Coffee, beer and enchilada sauce, for example. Ohio gasoline-price fluctuations have been so extreme that, in 2010 and 2011, the Federal Trade Commission investigated the phenomena. Its report said price cycling was a phenomenon of the upper Midwest and up-and-down prices were harmless to consumers. Isn't that an observation, and not an answer? And, which consumers did they ask? Such extreme fluctuation is described as an Edgeworth price cycle. It's an economics term that describes asymmetric price cutting. The cycle is uneven because the undercutting is generally slow, but price restorations happen concurrently. In March, and within two days, southern Ohio gasoline prices escalated by 30¢ per gallon. The morning news said factory repairs and the process of converting to 14 SIGNS OF THE TIMES June 2014 summer fuel blends were the reasons. "Summer blend" is the refiners' process to conform to established EPA standards for fuel that's blended for the hotter seasons. The commonly accepted reason is pollution, but, in truth, the blending - summer or winter - allows gasoline to meet the proper Reid vapor pressure (RVP). RVP is a measure of gasoline's volatility. It's the liquid's absolute vapor pressure exerted at 100° F. High-vapor pressure aids winter starting (less fuel buildup in the firing chamber), but detrimentally adds vapor-lock problems in summer heat, so oil refiners remix the fuel when the seasons change. If you've ever owned an old V-8 truck, you know about vapor locks. Essentially, ambient heat causes fuel to vaporize in the gas lines, which stops the fuel flow, and the truck. That American oil refineries seasonally engineer - blend - their fuel to aid drivers and meet the EPA standards is cool. But, stop the plant? By now, you'd think they'd have streamlined the process. If you're in California, your low gasoline prices are due to the Alaskan pipeline that tubes oil directly to your state refineries. Originally, exporting Trans-Alaska Pipeline-transported crude oil was illegal. This ban, written in the original deal, justified the pipeline's passing through unspoiled wilderness regions. That Alaskan oil was to only benefit U.S. consumers justified any environmental harm. Between 1996 and 2004, U.S. refineries exported nearly 95.49 million barrels of Alaskan crude oil to foreign countries. The offshore flow stopped in 2004, although the rules don't exclude the export of refined, petroleum-based products. In November 2012, a Los Angeles Times headline said U.S. fuel exports have grown to historic levels and then added "Energy experts say increased fuel exporting by U.S. refiners is one of the reasons that gasoline and diesel prices have been so high." Hydraulic fracturing - fracking - in oil fields is the excess source and, of course, there's Canada's oilsand deposits. "We should look to Mexico, Canada and Venezuela, to see where our cheap U.S. fuel is going," wrote LA Times writer Ronald D. White. He quoted the U.S. Energy Dept., which said refiners are selling diesel and gasoline to those and other countries at historically high levels. U.S. exports of finished, refinedpetroleum products, including gasoline and diesel, have risen more than 123% since 2006, to an average of more than 107 million gallons a day. California, according to U.S. Customs districts in Los Angeles, San Francisco and San Diego, exported 37.9 million gallons of gasoline and 117.9 million gallons of distillates, including diesel, in 2012, White said. Texas and Louisiana accounted for more than 60% of U.S. energy exports in 2012, with a combined value of over $87 billion. Will gasoline prices continue to increase and, therefore, cause plastic and commodities prices to increase? Economics 101: expanded supplies/higher demand + increased markets = higher prices. Steel IBISWorld Inc., a publisher of business intelligence (ibisworld.com), distributes various research reports, and one recently said "Bolstered by demand growth from recovering construction and industrial sectors, the rising price of steel is weighing http://www.ibisworld.com

Table of Contents for the Digital Edition of Signs of the Times - June 2014

Signs of the Times - June 2014
Columns & Departments
Features
ST Update
Technology Update
What Shops Need to Know about Windows XP
Vinyl Apps
Strictly Electric
LED Update
Software Update
Technology Review: X-Rite’s ColorTRUE app
Technology Review: Color-Logic’s process metallic color system
New Products
Advertising index
Editorially speaking

Signs of the Times - June 2014