Energy usage is common in all areas of society be it personal, household, industrial and other businesses. The two biggest contributors in terms of expenses or profit are fuel and electricity, with which the quantity of usage and unit cost determines the financial margins. Given low energy prices, various favorable returns are being welcomed throughout the economy and various industries.
Assuming that most individuals or businesses use the same amount of energy but, at the lower price per unit, expenses can go down considerably during periods of low energy prices. These overhead savings allow for financial resources to be allocated towards other critical expenditures and convert finances into expansion opportunities.
However, improper use of “newly found” finances via lower energy prices can also lead to missed opportunities. Here are the pros and cons of an economy with lower energy prices.
Positive Effects:
- Extra resources to meet maintenance and upkeep of facilities and machineries resulting to improved service reliability and operational efficiency
- Expansion of operation or increase service coverage
- Opportunity to offer discounts, rebates and promos to increase customer pull
- Source of funds to give incentives to employees and business partners
Negative Impacts:
- Tendency to stockpile fuel, which can later prove wasteful
- Delays in adapting to pricing roll backs
- Tendency to slow down in the implementation of cost reduction measures when prices rebound
- Complacency and lapses in the execution of established systems and procedures in effective ways to maximize energy price decreases.