With the price of oil down significantly, people have more money in their pockets to spend. It’s almost like everyone is getting a tax rebate every time they go to the gas pump. It seems that this drop in gas prices is going to last a while, and I think people in the replacement window industry will build on a very successful 2014 as a result of lower fuel prices.

This said, shouldn’t consumer prices go down with lower gas prices? On the surface, you would think so, but if you start taking a deep dive, you can see that sometimes you can have too much of a good thing.

Transportation costs should be down because gas prices are down, right? Gas prices are down, but there is a national shortage of drivers. Have you heard the advertisements on the radio for drivers? Carriers are paying a higher wage to attract more drivers, so transportation costs in many cases are going up.

The glass industry has 35 percent less capacity this year compared to 2014, which is significant. On top of this, the number of float lines in North America that were shut down during the economic downturn was significant, and according to USGlass, there are a number of floats that are scheduled to go offline for rebuilds for the next several years. A rebuild typically takes 18 months, which means glass supply will be stretched to the limit.

With vinyl, many believe that oil/petroleum has the most impact on vinyl production and costs. But ethylene and capacity utilization are the two critical factors there. Oil does has some effect, but there are many more factors that have a greater effect, including non-resin raw materials and global demand. Both have shot up significantly.

Don’t get me wrong—I like paying lower gas prices, and I hope they last. I think all of us as consumers should finally benefit from this recovery. But to keep it in perspective, the law of supply and demand will really kick in during our economic recovery. It’s a great challenge to tackle, and I am excited to finally be talking about recoveries rather than slowdowns.

Great Selling!

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