Warm Winter Hurting Some Businesses, Boosting Others
Apparel makers and retailers, ski resort operators and natural gas producers are feeling the pinch from abnormally warm winter temperatures in the U.S., although some companies could benefit from lower heating costs and snow removal charges, Reuters reports.
Average temperatures across the country were 3 to 4 degrees F above normal last month, and heating degree days are running 12 percent below normal levels. Canada, meanwhile, is seeing its second lowest amount of snowfall in 50 years.
The warm weather has helped to drive natural gas prices to their lowest level in ten years, causing companies such as Chesapeake Energy and ConocoPhillips to curb production. Gas inventories are more than 20 percent above last year’s levels, and oil demand has also fallen slightly.
Households’ lower spending on heating may eventually make its way into other parts of the economy, or into a higher savings rate.
Retailers are having trouble shifting winter clothing including boots, coats, hats and gloves, putting much of their stock on sale. Scott Bernhardt, chief operating officer of weather data company Planalytics, says apparel has been hit the hardest of any retail sector. Demand is also weak for snow shovels, snow blowers and rock salt.
On the other hand, a lack of paralyzing snow storms has let people shop more easily. Goldman Sachs estimates that if the weather had been normal, there might have been a slight contraction in retail sales in December rather than the 0.1 percent increase that occurred. Warm weather could also help restaurants and bars.
Another sector that could benefit is home construction, because warm weather allows builders to get an early start. But JPMorgan researchers have estimated that the impact is minor. Golf courses also seem to be doing well, as are outdoor attractions like zoos, WDBJ of Roanoke, Va., said.
Meanwhile, a lack of snow on the ground has reduced consumers’ appetite for both warm-climate travel and ski vacations. Business is down at New Hampshire’s Dartmouth Skiway, and the low snow levels means costs for artificial snow-making are up.
Companies might be tempted to see the abnormally warm weather as one of the first impacts of climate change on their business. But as Jeff Weber, a climatologist at the University Corp for Atmospheric Research in Boulder, Colo., told Discovery News, it’s too early to make that call. One warm winter is just too small a sample size, and as Time points out, “climate is what happens over years and even decades.”
As for the remainder of this winter, change could be on its way. Private forecaster Weather Services International expects temperatures from February to April to average colder than normal across the north and west of the U.S., above a Phoenix-to-Washington, D.C. line. Temperatures should remain above normal in the Southeast.
The WSI forecast calls for a 2.4 percent fall in heating demand compared to last winter, but a 5.2 percent increase relative to 1981-2010 averages.
Picture credit: Simon Greig
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