Household heating prices this winter are expected to be higher as a result of the ongoing Russian-Ukraine conflict. Depending on the severity of the winter, gas supplies could be in short supply, especially in the Northeast. 

 

The U.S. Energy Information Administration is forecasting that Americans who heat their homes with natural gas will see their heating bills rise by an average of 28 percent. Given that almost half of the households burn natural gas as their primary heating fuel, that is a painful poke in the eye for consumers who are already contending with high gasoline and food prices

 

Those who use oil for their home heating needs will not fare much better, with heating bills expected to climb as high as 27 percent. On average, your oil bill will cost $2,354 this year versus $1,212 in 2020, while gas bills will average $1,094.

 

Over the last few weeks, natural gas prices have fallen, but they are still up 68 percent thus far in 2022. Unseasonably warm weather in October, as well as an ongoing shutdown in a large liquified, natural gas (LNG) plant, has depressed prices. In addition, several LNG export terminals have closed temporarily for maintenance.

 

Before you ask, yes, we do have an overabundance of natural gas in this country, however natural gas, like oil, has become a political chip in the present conflict in Europe. Natural gas, as we know, has become the Achilles heel of Europe's conflict with Russia over the invasion of Ukraine. As a result, demand for LNG exports from the U.S. has become a critical lifeline for the European Union in both industry and consumers.

 

In the U.S., New England utilities depend on natural gas to generate electricity, unlike other areas of the country. This situation has worsened with the closing of antiquated, oil, nuclear-powered, and coal generators, which historically had accounted for about 25 percent of peak demand in the winter months. That is not a new situation. The Northeast has been wrestling with energy supply problems for more than a decade.

 

One of the main issues is New England's limited pipeline capacity. One proposed pipeline, for example, which would have transported natural gas from Appalachia to New England has been blockaded by "not in my back yard" opposition by New Yorkers. Today, more than one-third of natural gas supplies in the form of LNG are imported during periods of peak demand, according to EIA. What's worse, thanks to the Jones Act, which restricts the movement of cargo ships between U.S. ports, sea delivery of U.S. natural gas is almost impossible.

 

As a result, the Northeast is in the unenviable position of competing with Europe and other nations for foreign LNG. The going price for natural gas in Europe is $100 per million British thermal units (BTU), versus $30 per BTU in New England. That makes securing off-shore LNG an extremely expensive prospect. In addition, most utilities only purchase a portion of their imported gas on fixed-price agreements. They rely instead on the volatile, natural gas spot market to purchase additional supplies.

 

 If the winter turns out to be severe, utilities could be paying several times today's prices for fuel on an ongoing basis. In Europe, in countries such as Germany, frantic efforts to purchase and store natural gas in preparation for winter have been going on for months. Right now, the EU’s storage tanks are full and LNG tankers are lined up off the coast of Spain. 

 However, in New England, utilities have a limited capacity to store natural gas. We could see a situation that a harsh winter could set up a bidding war for supplies around the world.

 

As it stands today, if the Northeast has a moderate winter, natural gas supplies, while expensive, will be sufficient. However, if the opposite occurs, the grid may be in trouble as more gas will be diverted to heat homes, and less to generate electricity. If so, that could result in rolling blackouts, or conservation efforts to keep electricity supply and demand in balance similar to what happened in parts of California this summer during the state’s heat waves.

 

Thus far, the National Weather Service is forecasting warmer than normal temperatures across the southern and eastern U.S., let’s hope that is accurate.  

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

"… and were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter."

— Thomas Jefferson (1787)

 

The internet has introduced a brave new world for consumers worldwide, but it has also created enormous challenges for local journalism. Whether or not your local newspaper survives in the years ahead is up to you.

 

We are in the third decade of a continuing collapse in print media. Suffice it to say that without outside help, thousands of communities will end up with no access to local news. This is happening at a time when threats such as climate change, health emergencies, and political turmoil will make local news vitally appointment to all of us. 

 

Two areas, advertising and subscriptions, have traditionally provided the lion's share of sales and profits for newspapers. Both have suffered from the internet incursion by internet giants such as Google and Facebook. Social media now controls more than 75 percent of locally focused digital advertising revenue. The lion's share of those revenues is lost forever to print newspapers.

 

Fundamentally, digital advertising offers a greater reach to consumers at substantially lower costs. How low? As far back as 2015, the cost to advertisers to reach 400,000 readers on Google Search was $16 versus the Los Angeles Times print costs of $40,000, according to a white paper on local journalism by the U.S. Senate's Committee on Commerce, Science, and Transportation.

 

To make matters worse, dominant internet players aggregate local news content and data for their own sites, while forcing local newspapers to accept little-to-no compensation for their journalism output and intellectual property. If an individual newspapers squawks, they will soon find themselves cut off from what little revenue stream they can eke out from these giants.

 

In response, print journalism has scrambled to develop and enhance their own digital versions of the local newspaper with some success. But sadly, it will take years to fully grow that side of the business. In the meantime, how to survive is the burning question for print media.

 

Newspapers across the country have turned to the non-profit arena for help. The logic is unmistakable: newspapers contribute to the public good. Without them, American democracy may not survive, so receiving support from foundations, donors, and the community at large makes a lot of sense. However, tapping the non-profit market for funds is a stop-gap measure at best.

 

It will require years to transition the traditional newspaper business model over to the digital arena. At the same time, the product side of the local news business will require even more investment. Advertising will likely become less of the revenue pie, which leaves new subscribers to carry the load.

 

Berkshire Eagle Publisher Fred Rutberg sees non-profit activity "as a potential way to get from point A to point B." 

 

As for The Berkshire Eagle, "the challenge will be leveraging our strong base of print subscriptions, while increasing our digital subscriptions, when a whole generation of potential readers are accustomed to getting their news for free through the internet," Rutberg explained.

 

That may not prove to be as difficult as it sounds. I believe the impact of climate change on local conditions will create more demand for unbiased, in-depth local news. Fox News or CNN, for example, are not going to cover flooded bridge outings or down electric lines on your local commute, or if brown drinking and bathing water presents a hazard to your town's health and welfare. (Editor's note: Such as iBerkshires' local coverage of Hurricane Irene.)

 

In summary, whether you are an individual reader, a business, or a non-profit entity, there are actionable avenues you can take right now to ensure the health of newspapers and your own well-being on the local level.

 

If you don't subscribe to your local newspaper, do so this week. Consider the money and investment in your own streaming service that will provide you unbiased, accurate and valuable information in the uncertain times ahead.

 

Advertise, advertise, and then advertise some more, if you are a business that depends on the local community for everything from customers to schools, to health care, and more. Finally, those who are considering donations to address critical issues, or are a local or national non-profit entity, get involved, establish links with your local paper, and provide the relief they need. Time is of the essence.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Local newspapers are dying. Try as they might, changes in American society, aided and abetted by the internet, have forced many of these institutions to the brink of insolvency. Their demise could impact you in ways that you might never have imagined.

 

The newspaper industry, as most readers are aware, has been in a steady decline for years. A loss of readership and advertising, both traditional sources of revenue for centuries, have migrated to other media, such as the digital arena. The pandemic and the resulting economic impact on the U.S. economy only worsened what was already a bad situation, at least from an economic viewpoint.

 

Penelope Muse Abernathy and Tim Franklin at Northwestern University's Medill School of Journalism, Media and Integrated Marketing Communication recently released a study called The State of Local News 2022. Here is what they found: Since 2005, more than 2,500 newspapers have closed around the nation, on average, 100 newspapers per year or two a week have shut their doors. As a result, the number of newspaper employees have declined by 60 percent and on-staff photographers fell by 80 percent. Today, there are only 7,000-plus newspapers still publishing in the U.S. More than 80 percent are weeklies located in small and rural areas of a nation with a circulation under 15,000.

 

Of the 3,143 counties in the U.S., 200 of them no longer have a newspaper. That may seem small, but the loss impacts 3.2 million people and counting. Two thousand counties no longer have a daily newspaper, and 1,630 counties get by with only one newspaper, usually published weekly. All together that amounts to 70 million people.

 

As a result, "news deserts” have cropped up throughout the country. These are blind spots among local communities, according to research by the University of North Carolina, that no longer have access (or diminished access) to news and information that many consider necessary to the survival of a grassroots democracy.

 

To make matters worse, thanks to mergers and acquisitions, the 25 largest publishers now control about one-third of all newspapers, including two-thirds of all daily newspapers. Today, the 10 largest newspaper owners control half the daily newspapers in the county.

 

The main loser within this trend has been local communities as the focus of these competing media sources concentrates on international and national news. The resources devoted to covering community news and events have shrunk dramatically. This gives rise to a growing number of ghost newspapers.

 

Ghost newspapers is a term used to describe the disappearance of important local coverage that was provided to the community in the past. Since community news has historically been the driver of newspaper readership, less coverage translates into less readership, which generates less revenues and a further decline in local news coverage. This is what one calls a vicious circle.

 

In 2005, newspaper revenues were more than $50 billion, according to The State of Local News 2022 study. Since then, revenues have declined to $20 billion.

 

I wish I could say this circle has been broken but it is getting worse. The decline in local spending in newspapers is predicted to continue to decline. BIA Advisory Services, a firm that tracks ad spending in local media, predicts by 2025, newspaper print ad sales will decline to $5 billion, a massive decline from revenues today.

 

Historically, local newspapers have been the prime, and sometimes only, source of credible and comprehensive news and vital information. It is why the First Amendment was included in the U.S. Constitution. The facts are that newspapers have affected the quality of life in thousands of small and mid-sized communities around the country for centuries.

 

Newspapers have been in the thick of public policy debates in every state, city, town and village in America. The stories, the extended coverage of issues, and their editorials have not only shaped, but have made history time and time again. Today, they are still doing that. From the beginning of the COVID-19 pandemic, if you are like me, the critical information I needed to safeguard and protect my family and friends was supplied by my local newspaper on a daily basis. It was a lifeline that no national news source could hope to furnish.

 

I believe climate change is a mounting danger that communities throughout the country will need to face. Frequent information on local weather conditions, road emergencies, hospitals, shelters and other critical alerts will become increasingly important. We need local newspapers today, now more than ever. Just look at what is happening in Florida today, or eastern Kentucky, or communities that depend on the Colorado River for survival to see where we are heading.

 

Local communities have a choice. The way I see it, unless something is done to save this industry, we are all in trouble. We need to figure out a way to preserve and resuscitate the local newspapers or face an increasingly unknown future without them.

 

The burning question is how? In my next column, I will examine what communities and local newspapers are doing today to not only stem the tide but reverse the direction of the newspaper industry and enhance their communities at the same time.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The demise of the neighborhood ice cream truck business has been predicted several times over the years. Higher costs, new delivery methods, and lots of competition from grocery stores and other sources threaten the business. But don't count them out quite yet.

 

Earlier this summer, The New York Times published an article, "Melting Profits Threaten the Ice Cream Man," which prompted me to delve a little deeper into this business on the local level.

 

Nationally, most ice cream vendors are individual entrepreneurs who lease their trucks from a regional company on a yearly basis. Many lessees also buy their ice cream products from the same company. They are on the hook for all their costs, and in an inflationary environment like we are in now, those costs could sink an inexperienced vendor in a competitive market such as New York City.

 

The internet and a variety of takeout apps have increased competition to the street tucks. Walmart sells any number of Good Humor products and ice cream parlors promise not only designer ice cream but all sorts of exotic experiences. Illegal street vendors and food carts also provide alternatives, and more often than not, can undercut prices charged by the trucks.

 

Selling ice cream on the street has been around in American urban centers since before pasteurization was invented. In 1904, the ice cream cone was introduced at the St. Louis World Fair. In the 1920s, Harry Burt of Youngstown, Ohio, developed a smooth chocolate coating over ice cream that was eaten on a stick like a lollypop called a Good Humor Bar. Burt purchased 12 refrigerated trucks in 1922 so that he could distribute his new ice cream bars throughout the neighborhoods. The company expanded its truck fleet, especially after World War II, when ice cream production boomed. However, the competitive landscape began to change.

 

During the 1950s, when I was a kid back in Philadelphia, the Good Humor refrigerated truck was a fixture on my block.  Several times a week, a white-shirted driver opened his rear door and for 25 cents presented me with my favorite, the original chocolate-covered ice cream bar.

 

In 1956, competition came to my Philadelphia neighborhood. A new ice cream truck entry, Mister Softee (founded by two brothers in my hometown), arrived complete with a fantastic new kind of soft serve ice cream. The arrival of this new sweet treat vehicle was preceded by the enticing sounds of a catchy tune that could be heard several blocks away.

 

In my neighborhood of row homes, kids (and many parents) listening for the approach of this new Pied Piper of ice cream, would line up. Everyone had enough change jingling in our pockets to sample these afternoon delights, covered in multi-colored candy sprinkles, and all sorts of wonderful toppings on many a hot summer day.

 

The Good Humor company finally sold off its truck fleet in the 1970s, preferring instead to concentrate on distribution of its ice cream products to grocery stores and other sales avenues. Unilever purchased the company in 1989. Mister Softee trucks are still plying the streets. However, as time goes by, ice cream trucks are becoming less and less common. But not in the Berkshires.

 

Several days a week this summer, while I was day trading the markets, the dulcet tones of the "Theme from The Godfather" drifted up through my windows. In the street below, a white Mr. Ding-A-Ling truck drives slowly by on his usual route.

 

It is one of a fleet of 66 trucks owned and then leased to independent operators by Brian Collis, the 70-year-old owner of Ding-A-Ling Inc., a family business, established in 1972. Headquartered outside of Albany, N.Y., the company distributes ice cream products, which he buys from the Good Humor company. His trucks roam territories within a 150-mile radius, which includes parts of Vermont, Massachusetts and New York. Three of his trucks service the Berkshires, including Lenox, Lee, Great Barrington, North Adams, and Pittsfield.

 

"It is a steady business and fairly predictable," Collis said. He laughs at the dire predictions of his imminent demise. "Back in 2012, when gas prices were $4.29 a gallon, there were predictions that we would suffer and some ice cream trucks would be run out of business, but that never happened."

 

He admitted that ice cream costs, like everything else, have risen, but so far customers seem to accept the higher prices. As for the independent operators who lease the trucks and sell the ice cream, "I have a waiting list of drivers who want into the business."

 

I chased down one of his independent operators this week. Notebook in hand, I simply followed the "Godfather" music. Ding-A-Ling operator, Richard Rockefeller just turned 59, and has been serving the same route for the last 15 years, working seven days a week. "I have built up a lot of repeat customers over the years," the gray-bearded, neon, T-shirt-clad entrepreneur reminisced. "Pregnant mothers were customers back then, and now their children are customers, too. Just seeing these kids grow up and the joy on their faces when I come around, well … ."

 

Inflation, he admits, has taken a heavy toll on his wallet. "I spend $210 a week on gas alone. You add in the lease on the truck, the local fees, background checks, etc. that I'm paying, plus everything else, and I need to make $120 per day just to break even."

 

But he's not singing the blues. "I make a good living, but it wasn't like that at first," he explained. Starting out years ago, he had to learn where and when to find repeat customers and then stick to a predictable schedule to build his client base. "Sometimes, when I have a party to serve, I get holy hell from my customers when I don't show up."

 

I asked what keeps him driving and showing up day after day. "Three words," he answered, it's fun, enjoyable, and it's a commitment." Sounds like a recipe for success in my opinion.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

In most new homes there is a litany of appliances that buyers almost automatically purchase, one of which is the dishwasher. While ovens, refrigerators, washers, and dryers are used almost daily, the dishwasher is among the least-used appliances in American homes.

 

The global dishwasher market is well over $7 billion and projected to grow by 7.5 percent to $10 billion by 2025. Much of that future growth is due to smaller-sized food service organizations. This list includes companies, businesses, institutions, and organizations that prepare meals and serve them to consumers and other customers. Of course, restaurants, cafeterias, hotels, and catering businesses are included in this demand base.

 

On the consumer side, busier lifestyles, increased employment, especially among women, and the expansion of nuclear families in both the developed and developing world have contributed to dishwasher demand. The increased convenience of shopping, thanks to the internet, has also made the purchase of most household "white goods" easier and faster. The COVID-19 pandemic disrupted supply lines, reduced travel, and increased prices for most home appliances, including dishwashers. However, these issues are beginning to lessen.

 

Dishwashers go back a long way. The first mechanical dishwasher was patented in the U.S. in 1850. It was made of wood and cranked by hand. Other machines improved the first, but few were commercially viable.

 

It required the widespread use of indoor plumbing and running water in the home before dishwashers could be considered as a viable household appliance. The postwar boom of the 1950s saw some of the wealthier households purchase such machines, but it wasn't until the 1970s that dishwashers became commonplace in both the U.S. and Europe. By 2012, more than 75 percent of homes on both sides of the pond had dishwashers.

 

However, unlike other kitchen appliances like the refrigerator or the electric stove, the dishwasher has not proven to be indispensable. Today, more than 89 million American homes have a dishwasher, according to the U.S. Energy Information Administration, but almost 20 percent (nearly one in five), fail to use it.

 

A breakdown of weekly dishwasher use statistics reveals that about 4 in 10 households don't use theirs in a given week, and just 11 percent of Americans use it once a week. Only 11  percent use it daily. In our own household, I would guess we run the dishwasher every other day between the two of us.

 

The reasons for its scant use are varied. There will always be a segment of the population that simply distrusts technology of any sort. Then there are those, usually older folk, that grew up washing dishes by hand. They don't see a reason to start letting some automated contraptions do what a little elbow grease can do better, and in a shorter time period.

 

Recently, climate change and the resulting worldwide drought has added another reason for not using the dishwasher. The growing recognition of water scarcity and the estimated lack of access to safe water for an estimated 771 million people worldwide, according to Water.org, has influenced even more people to use their dishwasher sparingly. All in the name of wasting less water.

 

That is a mistake. The Environmental Protection Agency says Energy Star dishwashers use nearly 5,000 gallons less water per year, compared to those who wash dishes by hand. This has not escaped the attention of companies that produce or sell products that require water to work. Proctor & Gamble, for example, the maker of the dishwasher detergent, Cascade, has argued and promoted the idea of "rethinking the sink." The company argues that skipping the pre-rinsing of dishes and instead running the dishwater daily will save you gallons of water. Another detergent brand, Finish, sold by consumer products company Reckitt, is urging consumers to "skip the rinse" as well.

 

This summer, our area (Berkshire County) is under certain restrictions to conserve water. I confess that my wife and I are in the habit of pre-rinsing dishes before putting them in the dishwasher. My thoroughly modern daughter, who uses her dishwasher daily, simply shakes her head at this practice. She says it in not only redundant but wastes water. I promise to stop that practice, and at the same time, up our use of the dishwasher further. What about you?

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.