The other day I saw an article by a religious writer who wrote about how the year 2015 will mark the beginning of the end of the world as we know it. And although I’m not saying I agree with that (and it doesn’t have anything to do with the content of this article), 2015 will surely signal a major end for something in the air-conditioning field. For by then, we will be right in the most critical part of the declining production of R-22 in the United States (it started in 2005 and runs to 2020). That year will probably be the beginning of a disaster for millions of air-conditioner owners, because R-22 will become very scarce for servicing purposes and its price will go through the roof! And the question is: Is your company preparing for THE END?
Remember R-12?It was about 17 years ago that I wrote a similar article about the coming phase-out of R-12, and I warned that its price would jump from what was then $1/lb. to about $85/lb. Then I talked to industry groups around the country about what was coming and Rheem even made a video of one of these presentations, which they sent out to their entire dealer network.
I was somewhere in the Midwest (Kansas City or St. Louis) speaking to a group of HVACR contractors back in 1992, and afterward one of the locals came up and put his arm around me and said, “Jim, you’re a good old boy, and I’m sure you believe what you’re saying, but you sure don’t know this industry - it will never happen!”
Well it did happen, but the phaseout of R-12 didn’t affect the air-conditioning portion of our industry too much. And even the refrigeration portion wasn’t hurt that bad, because although R-12 quickly became scarce, there were alternatives to fall back on. However, the same won’t be true of the R-22 phaseout, for it looks like it will be a disaster!
Back in the ’90s I told readers to stock up on R-12 while it was still cheap, because its price would do better than the stock market. But then the government put a rising floor tax on all stocks of R-12 (all that they found), and most of the profits were lost. So I recommended a push on recycling and recovery, which the government again shot down with ill-thought-out regulations, and R-12 soon became extremely hard to find.
What About R-22?By 2015, R-22 will start becoming as rare as hen’s teeth, and there will be no true drop-in replacements, so it will soon become extremely valuable, too. The EPA won’t allow a contractor recycling program, they will probably put floor taxes on any remaining stocks, and 2015 will be the year when it is estimated that supplies will drop below what is needed to service the existing equipment. Will we again see smuggling of the product from other (Third World) countries where production is still allowed? Probably.
Despite possible floor taxes and all the rules that the government will come up with to try to make life expensive and difficult for you and your customers, are you setting aside some of your now abundant stock of R-22 for use by your customers when they really need it? Although recent glitches in the market and shifting productions caused an increase in stocks, that won’t last very long, and then your customers will be hounding you for R-22 to fix the equipment that you’re selling them today. (Could someone get sued?)
Yes, the end (of R-22 production) is truly coming. Are you readying yourself to meet your customers’ future needs?