Monday, February 20, 2012

What’s going on with – Part 2 – Today’s market

Posted by on Feb 17, 2012

A good question to possibly ask is, “why does this matter now?”. R-22 is available now, and we have until 2020 before the production stops. I guess the good news is that our industry has done a pretty job of changing over to R-410A and moving away from R-22. As a result, the demand for R-22 has actually been less than anticipated in the allocation plans. In 1986, producers of R-22 only utilized 86% of their allocations (source – 

The EPA has to legislate these allocations. They have tried to reduce these allocations to not only comply with the law, but also to anticipate the market and demand. That being said, as of the 1st of January 2012, the EPA had not released their allocations for this year. So as of January 1st, the manufacturers of R-22 did not have the authority to produce or import and R-22 – production totally stopped.

If you remember from your high school economics courses, when supply goes down or stops and demand remains relatively constant, the price goes through the roof. As contractors, we saw an increase of almost 3x between December 2011 and January 2012. We also saw rationing – one of our suppliers will only sell 5 drums of R-22 per contractor per week.

On January 20th, the EPA set a letter to producers and importers of R-22 allowing them to resume the production and importing of R-22. But, they have not set final allocation numbers for this year. so, the market is still unsettled.

Over the last month, pricing has settled down a bit, but it is still 2-2 1/2 times the price in December. No one knows exactly where this will go moving forward and how much R-22 will be available for use this year.

The reason that we wanted to post this and give you the details is because a large majority of residential and commercial cooling systems still use R-22. And, while R-22 is not a consumable in the system, as your systems become older, they can begin to leak slowly which will require R-22 to be added.

Hopefully, this information will help you be able to make a good decision about whether to repair or replace a leaking system. Obviously, as R-22 wholesale pricing is up 2-3x, retail will be the same. We saw retail pricing of R-22 in the $80-$90 per pound range. And since a residential air conditioning unit may contain 5 pounds or more, it can get quite expensive to repair an R-22 system.

Next time, I will focus on more of the practical issues facing consumers and contractors this year. I will also discuss “dry-charge” R-22 units that have become available on the market – should you buy one or not?

As always, please feel free to call us at any time to discuss this or any other issues relating to your heating and cooling systems.

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