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Week of 11 May 2020: What is predictable in energy trends?

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In a world where every storage tank, every ocean-going tanker, every cavern or old mine that can be modified for oil storage is full to overflowing, what can we say about energy trends? Add to this the popular public anathema to fossil fuels, and one can find themselves in a tight box with virtually no way out.

In these times, energy trends become what you can control. What you can control means what you own. It was pretty clear in my Mennonite example last week how they control their energy costs.

You, mill manager, have to do the same thing. Be miserly, even when energy is cheap. Pay especially close attention to what you control, for in the long run, it is the most stable, hence most predictable, energy source you have. Make your own energy trend.

So, what do you have and what can you control? First you can control how much energy you consume.

You can control your consumption with insulation for sure. Insulation has been popular for at least fifty years. You can always add more. You can always keep what you have in good repair. I'll throw caution to the wind and say that insulate whether it has any payout under current conditions or not.

You can critically look at shutting down energy consumers or shutting them down at certain times of the day, so you are not using energy when it is more expensive. This works no matter the cost of energy, in this case electricity, because you are looking at relatively consumption timing within your own facility.

I'll bet you are wasting steam right now. We have a great advertising client that can help you with that--Fulton Systems. Every mill I walk in, even the new ones, are wasting steam. Energy you don't use is energy you control.

If you have any throttling valves on pumps and do not have a program in place to replace those with VFD (Variable Frequency Drives), at least start the study today.

If you have the appropriate boiler assets and you are a virgin mill, you can burn bark. Under such conditions, it is completely outside the normal economic system controlling energy costs.

In all cases, keep your energy generating assets clean and in good repair.

If your company owns a hydroelectric dam, don't sell it! This is an energy source you completely control (but it likely needs operating permits, so keep those current).

If your company owns storage tanks suitable for storing the kind of energy you use, this is the time to fill them up and take ownership of that energy. You may have idled tankage anywhere in the mill--assess it, refurbish it and fill it up.

Above are the physical things I can think for you to do.

Here is another idea. If you are allowed to by futures contracts for energy of any type, this must be the best time in the history of industry to do this.

There is a fire sale going on in energy right now. You will never find energy cheaper than now. Buy it up and plan for the day when energy will be more expensive. The price trend of energy is up from here.

Be safe and we will talk next week.


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