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Archive for Saturday, April 22, 2006

Energy costs place extra stress on bottom line

April 22, 2006

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Some are turning down the thermostats. Some are cleaning their boilers or replacing lighting. Some are just suffering and hoping to make it through.

These are some of the ways local businesses are being affected by rising energy costs. Natural gas, for example, has nearly doubled in cost in recent years for commercial consumers, from $7.16 per thousand cubic feet in December 2002 to $14.31 in December 2005.

For Larry Ojeleye, owner of Affordable Limousine Service, climbing petroleum prices are the killer.

"When I started this business, gas prices were like 70 cents a gallon. Now it's an average of $2.30," he said. "I've lost a lot of business because of that. They just find another alternative to get to the airport. : It was costing me probably about $20,000 a year for gas. Now it's gone up to close to $40,000."

Ojeleye said he did more driving himself to cut labor costs and had added gasoline surcharges. But he said he couldn't raise prices any more because of the potential of losing more business.

At Hallmark Cards Inc.'s Lawrence production plant, things were a little cooler this winter.

"Like a lot of businesses, we've turned the temperatures up in the summer and turned the temperatures down in the winter a little bit - about 3 degrees," said Don McGlinn, engineering manager for the plant at 101 McDonald Drive. "We're not hearing any complaints from employees, so I don't feel like they've really noticed it."

Don Tutko, a Missouri-based energy consultant, said the most important change businesses could make to cut energy costs for their buildings was to install "T-8" fluorescent lighting, which uses less electricity and produces less heat than traditional fluorescent light, making it easier to cool a building during warm months.

"It provides the same quantity of light for 28 percent less energy, and produces a better-quality light at the same time," Tutko said. "In new buildings here in the Midwest, it's about all that you can get."

Hallmark made the switch to T-8 lighting in 1999, McGlinn said, and planned on taking five years to recoup the costs.

"It's pretty good stuff," McGlinn said. "It's paid off by now."

Another change Hallmark made a few years back was to overhaul its boilers by getting rid of tubes that had caked-on mineral deposits from water.

"In a facility this size, the boilers are really the key to efficiency or lack of it, so we had them cleaned (and) all the bad tubes replaced," he said. "That's made a huge difference."

Another company that has turned to its boilers for savings is Lawrence Paper Co., which put new regulators on them about six months ago as a way to control energy costs.

"It's an expensive proposition to heat the place, so it's a big concern," said Justin Hill, the company's president.

The potential for energy savings for businesses can come from surprising places. For example, Tutko said, some vending machines now come with sensors that shut off the machine's lighting when there's no one around. That's a potentially significant savings, given vending machines can cost $500 to $600 per year in electricity costs.

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