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What Price Fuel?
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Minnesota Community Living March/April 2011

What Price Fuel?

By Gil Cross, BEI Exterior Maintenance

The oil embargo of the early ‘70s contained a few important lessons that this country did not seem to understand. Fossil fuels are important and will shape the way ahead for all of us. Move ahead nearly 40 years from the oil embargo and the role of fossil fuels has entered a new age. From 2008 to now, the cost of asphalt shingles has more than doubled. In just the past 10 weeks, the price of gasoline has steadily increased, with the prediction that $5.00 per gallon gasoline is not that unthinkable and not that far ahead. Recent events in Tunisia and now Egypt point to a new political and social direction in the Middle East. A quick look at a map will show the importance of the Suez Canal – a lot of petroleum is shipped through the Suez Canal. What does all of this mean for community associations?

First, the current situation is different and obviously more volatile than the original oil embargo. This time the economics are being driven by the impact of social unrest, not the plotting decisions of the OPEC cartel. The implication is the ride could be a lot bumpier. So here are some thoughts to consider:

  1. Review and revise your community association’s replacement reserve plan. If you are still relying on pre-2008 roofing cost, your community association is likely to be seriously underfunded when it comes to roof replacement. Talk to your general contractor about these costs and the availability of new technologies that may offer new opportunities.
  2. Review the nature of your community association’s landscaping. Can changes be made that will achieve the aesthetics desired while improving or eliminating fuel consumption? Talk with your grounds contractor about the possibilities.
  3. Conserve. If you haven’t initiated conservation programs, now is the time to understand their importance and begin the process of implementing changes. Recycling materials, including yard waste, may have impact on your grounds contractor or trash hauler’s fuel consumption.
  4. Consider alternative energy sources. If your association has not considered renewable energy sources for its common areas, this may offer an approach to reducing reliance on fossil fuels. There is a new wave of technology coming upon us, and it is fueled by government money that requires public utilities to step up their incentives and rebates for more efficient and sustainable uses of energy.
  5. Review your existing contracts. Review your existing contracts and talk with your contractors now. Fuel adjustment clauses are not likely to be inescapable. Know what your contract says. It’s muddled thinking to believe your contractor can perform the same work at the same rate if fuel cost escalate significantly. Negotiate a course of action now in anticipation of what may lie ahead.

There is one more sure thing to add to your list beyond death and taxes – energy costs are going up. It’s not rocket science, but you do need to act and move forward to improve your situation. Otherwise, you’ll have to dig deeper in your wallets to deal with the increasing costs of fossil fuels.

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