|Lights Out. Businesses Out?|
|Subject||Types of costs and shut down condition|
|Topic||Production and Costs|
|Key Words||Energy costs, shut down, prices, production, consumers, profits|
In California, energy costs are spiraling. Natural gas prices rose first; now electricity prices have been permitted to increase. Businesses are hurting. For instance, a potato flake plant in Tulelake is shutting down for the second time in a month because of a sixteen-fold increase in natural gas bills. Flower growers are threatened because their greenhouses use energy-gobbling lamps. Farmers who use fertilizer (a key ingredient of which is natural gas) are expecting to have to increase prices. Rolling blackouts cause restaurants to limit their menus to items that can be cooked without high heat, stores to close, and firms to lose production. Consumers, faced with higher energy bills, have less money to spend on goods and services, exacerbating the plight of California's economy.
In general, profits are endangered, prices could increase, and production may be curtailed. Some producers are thinking about leaving the state. However, the effects are being felt elsewhere in the country. For example, the potato flake plant sells to other producers such as Procter and Gamble to make potato chips and instant mashed potatoes.
(Updated February 1, 2001)
|Source||Matt Krantz and Jon Swartz, "California's power costs zap businesses," USA Today, January 17, 2001.|
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