Is It Possible That There is a Relationship Between Energy  Costs and the Health of the Economy ?

One obvious reason for the business downturn, some may call it a recession, is the increase in energy costs. My home is only about 1200 square feet, yet the increase in electricity and gas costs this year, 2001, has become $141 per month, on a budgeted plan. Our electricity and gas combined bill has gone from just under $200 per month to $341per month. Larger houses or customers who for one reason or another use more electricity and gas would find a larger increase. This is in New York State after deregulation.

Well business owners, if my case is representative of the majority of your customers, what will the effect be for your business. Unless you are selling alternatives to the conventional power sources, it probably won't be good.

Let's see, if all of the families that do business with you are going to have $141 less per month to spend...that can't be good, can it? Small businesses may be especially hurt. What might it mean? If you see 45 customers on an average day and half of them are buying, that's 540 per month, if your store is open 6 days a week. If half of them are repeat purchasers, that means there are 270 individual buying customers. If they each have to pay their energy provider $141 more for the next 5 months, you and the other places they shop, stand to loose $141 x 270 per month in lost sales because they don't have as much money to spend. When you do the math that is $38,070 per month in lost sales from 270 customers divided between the places they shop.

Your electricity and gas costs went up too, didn't they? Well, what happens when you budget your increased cost of doing business because of energy cost increases that you are paying, coupled with customers who have had a decrease in spendable cash? Let's hope all your customers get pay raises soon.

Have a nice spring.

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