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Murphy's Law: R-22 Shortages Questioned

November 30, 2009
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Mike Murphy

Mr. Pete Williams e-mailed The NEWS recently to complain about an article in our Oct. 12 issue. Something about how our article had been too one-sided, not journalistically objective, and included a reference to a heretofore anatomically impossible feat. I often call such fans of the magazine - it is fun to talk with crazy people as it keeps the creative juices flowing.

Much to my dismay, I found Pete to be a regular guy who had given up the banking industry for the camaraderie of our industry - well, maybe he is just a bit challenged.

The conversation with Williams did spur a few ideas, which are now shared with you.

THE FACTS PLEASE

A good place to start is with some information that was recently presented at a Food Management Institute (FMI) conference. Regarding the use of HCFC refrigerant in new equipment: as of Jan. 1, 2010, virgin HCFCs will no longer be allowed to be charged or imported in new equipment or in pre-charged parts (TXVs). However, there may be a loophole allowing for the use of reclaimed refrigerants in new equipment. Hmmm.

There has been some question as to what date would be applied to virgin refrigerants. In other words, is it legal if the system or pre-charged parts were produced or shipped before 2010 - “Well, of course it’s OK if it was already in the pipeline.” - the truth is that as of this writing it is not yet defined by the Environmental Protection Agency (EPA) regulation.

Rather than improperly alarm anyone, the EPA is expected to act favorably on this and other related issues by Dec. 31, 2009. However, the EPA is not indicating that it wants to allow for any stockpiling.

On another note, based on the “2008 EPA Allocation Draft Proposal” and the June 2008 report: “U.S. Phase-out of HCFCs: Projected Servicing Needs in the U.S. Air Conditioning and Refrigeration Sector,” the 2010 R-22 demand will exceed supply by 27.5 million pounds.

THE CONTRARIAN PLEASE

Now, to the ideas posited by my new friend, Mr. Williams. “Nowhere in The NEWS’ article is there any mention that the price of HCFC-22 has consistently fallen throughout 2009. A question one might ask: Was all of the R-22 authorized to be produced in the United States for 2009 actually produced? Will there be a shortage? Let the free market system work. There was never a shortage of CFCs during or since the last phaseout go round. The fact is it was a function of price. Holders of CFC-11, -12, -113, -114, -500, and -502 were willing to make their product available as long as the price was right. Look at the press releases from that era and you’ll see the same thing we are hearing today,” said Williams.

THE OPINION PLEASE

Though all of us are sure that the volatile prices at the gasoline pumps are a result of the cruel manipulations of Big Oil as they open and close the spigot as they so desire, regardless of indicators that might point otherwise - does anyone in the HVAC industry believe that Big Refrigerant could actually be toying with the HVAC market in the same manner? Mr. Williams, could you seriously believe that to be true?

But, it does give rise to other questions: Could current moderate prices of R-22 perhaps be even lower? And what if the amount of R-22 produced was exactly commensurate with the amount of new equipment being produced? Would there really be a shortage?

Maybe the phaseout schedule is simply too slow. If the spigot were simply shut off on Jan. 1, 2010, if there were no more virgin refrigerant for anyone’s use, be it new or existing equipment, it might be interesting to see how prices of R-22 would escalate. With price escalation would come more conservation of existing product, more recovery (less venting), more recycling (less venting), and more reclaiming.

If there is going to be a 27.5 million pound shortfall of R-22 for servicing existing equipment, what could be done to make sure there is more around for the future? Reclaiming has not yet become profitable enough for contractors to return much more than about 3 percent annually. If R-22 became crazy expensive, like $100 per pound, there is a high likelihood that contractors would begin to search out one of the more than 2,000 refrigerant reclaim locations around the United States.

For now, most contractors expect to cope with higher R-22 prices in the very near future. There is not yet enough pain, or benefit, to cause anyone to really beat a path to the door of a reclaim company.

Maybe I’m just venting, but so are you.

Publication date: 11/30/2009
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