June 22nd, 2010
Avoiding the Big Rollover: The Mandate and Market Approach
The recent BP offshore drilling catastrophe has renewed the debate about the pros and cons of offshore oil drilling. The advocates of offshore drilling say that it is absolutely necessary to reduce our dependency upon foreign oil. Those against offshore drilling bring up the risks of damage to the environment. The recent pictures of dying marine animals on our nation’s beaches remind us of the risks. Those in favor of oil drilling cite the work of L.B. Magoon, who predicted what is known as the “Big Rollover.” (CLICK HERE for more information.)
What is the Big Rollover? It is the point at which the world’s demand for oil outstrips our capacity to produce it. When this happens, we won’t be complaining about the price of gasoline anymore. Instead, we will be complaining that we cannot even get it!
At the turn of the century, Magoon predicted that the Big Rollover would occur sometime between the year 2003 and 2020. We had two mini-rollovers before – one in the early 70s and also one in the mid 80s. Do you remember waiting in line for hours at the gasoline station just to fill up your tank?
The government’s concern that the Big Rollover is looming on the horizon is partially what is fueling the desire to expand domestic offshore drilling.
But in order to postpone the Big Rollover, the government is trying to not only work on the supply curve, but also on the demand side of the equation as well. This is why our fenestration industry is seeing such great activity in terms of what I call the “Mandate and Market” or simply the “M&M” approach.
First of all, the government is mandating the use of more energy-efficient products. We see this happening in the form of building codes with a greater emphasis on energy performance. At the same time, the government is also becoming more proactive on the marketing side with both the Energy Star program as well as the R5 Volume Purchase Program. This is a push- pull approach in that it aims to both push (from the top down) the use of more energy-efficient window products while at the same time to pull or induce (from the bottom up) interest in producing and selling products which create and sustain maximum energy savings in both new construction as well as renovation applications. As we increase the average energy performance rating of installed fenestration products in this country, we significantly impact our nation’s energy thirst and this impacts the demand curve. This in turn will serve to postpone the Big Rollover, and buy us more time to develop alternative energy resources.
Indeed, window manufacturers marketing the advantages of energy-efficient windows and doors have never had it better in terms of programs which serve as market catalysts for sales of energy efficient fenestration products.
Despite our soft economy, most door and window manufacturers, at least on the replacement side of the business, say that they are doing alright. Once the economy itself comes back, the cumulative effects of M&M combined with a resurgent economy are most likely going to have an astounding impact upon the demand for energy-efficient window and doors. I can’t wait to see it happen!