Pennsylvania’s most famous groundhog emerged from his burrow, saw his shadow and predicted six more weeks of winter. Source: The Washington Post
According to our nation’s favorite prognosticator and full-time groundhog, Punxsutawney Phil, we’re in for another six weeks of winter. For those of you that live in the midwest or on the east coast, you didn’t need a groundhog to tell you that this morning.
Seeing Phil’s forecast got me thinking a bit more about winter, especially on the heels of the mis-forecasted Snomageddon-that-never-was of last week.
I decided to delve into the longstanding tradition behind Groundhog Day, as well as the financial ramifications of six more weeks of winter. Though it seems a bit hokey, I was surprised to find that Groundhog Day actually provides some much needed insight into most cities’ annual winter budget. Here’s how Groundhog Day predictions can affect our economy:
Sky-High Energy Bills
Last year saw record snowfall, dangerously low temperatures and a cultural phenomenon known as the “Polar Vortex.” With this came sky-high energy costs for many financially strapped Americans.
According to the New York Times, the cost of wholesale power in the New England states alone reached $5.05 billion from December 2013 to February 2014, leaving many families with monthly energy bills 110 percent higher than normal. Utility companies blamed the steep price increases on New England’s lack of pipeline capacity to bring natural gas to the region, in addition to their reliance on imported oil, gas and coal.
Casting all blame aside, increased energy costs leave thousands of Americans in dangerous financial territory. Many families and business owners have to set aside extra funds for pricey energy-efficient appliances, and are struggling to keep businesses and households afloat.
Cost of Snow Removal
There’s a lot more that goes into a snow storm than you’d think. Unfortunately, it’s our wallets that often endure the brunt of Mother Nature’s wrath.
According to The Wall Street Journal, for the fiscal year of 2013 to 2014, New York City devoted nearly $663.2 million to snow removal efforts. Over the past 12 years, it’s estimated that each inch of snow removal in NYC cost an average of $1.8 million.
Don’t waste your time praying for a mild winter. Costs are actually usually higher in years with light snowfall because the city must prepare regardless of actual snowfall amounts. “It’s a lot more expensive on a per-inch basis when we get a little snow because we have startup costs and we have fixed costs. We have to have plows and salt,” explained City Comptroller Scott Stringer.
Salt Supply and Demand
During particularly daunting winters, like the one we experienced last year, many communities aren’t equipped with enough road salt to appropriately respond to each snow storm. Salt shortages lead to an increase in prices which, while obviously detrimental, are preferable to leaving citizens endangered, like we saw in Atlanta last year.
For instance, areas of Chicago that purchased bulk salt for $53 per ton at the beginning of winter 2014 rounded out March spending as much as $200 per ton. According to Yahoo, the Pennsylvania Transportation Department had gone through 686,000 tons of salt by January of 2014—more than 200,000 tons beyond the amount used in a typical year.
Working Overtime
Waging war against a polar vortex also requires a record-setting amount of man power.
In addition to the cost of snow removal, salt and energy bills, increased snowfall in one small Indiana town required an extra 2,179.15 hours of overtime, accumulating nearly $50,000 in overtime costs. Overworked employees were not only plowing and salting roads, but also tending to stranded drivers and battling mechanical problems brought on by sub-zero temperatures.
When you factor in the thousands of other towns that experienced a similarly brutal winter, the cost of overtime alone foots a heavy bill.
With the national economy still very much in the throes of financial volatility, a life-threatening winter can also threaten stability and progress. Although a somewhat trivialized event, Punxsutawney Phil’s seasonal plight bears more than just folklore tradition. Think of it as an economic forecast just as much as a weather forecast, even if it’s validity is often questioned.
