HVAC and the Gell-Mann Amnesia Effect

Today I read this choice article on Fox with the lengthy title of “Air conditioning shortage ahead of hot summer causes nationwide price spike” and was reminded of the Gell-Mann Amnesia Effect. To remind everyone, the definition is:

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.

As someone who has been in the field of HVAC distribution for 32 years I know a thing or two, as they say. Lets take a look at this article (yes, a good old fashioned fisking) and see if it reports what we are seeing on the ground here, or if reality has been distorted somewhat, and we perhaps have an example of the Gell-Mann Amnesia effect as I peruse the rest of the news for today.

Right out of the gate there is this:

It follows a year of growth across companies within the HVAC category, with major manufacturers like Trane Technologies PLC up 24% year-over-year, while Raytheon Technologies ticked up 21% and Avis Budget Group surged nearly 125%.

I had no idea that Raytheon or Avis had anything to to with HVAC, but I suppose one of their subsidiaries could. I highly doubt it.

However, the proliferation of air conditioning units is outpacing supply. Shipping delays are rippling down the supply chain, resulting in a lack of inventory for components.

Proliferation means a rapid increase in numbers. I am assuming that the writer means that the DEMAND is outpacing supply which is sort of true, in certain markets and with certain products. There are shipping delays in everything, but we have been adjusting to the new world bringing in more safety stock. I am assuming also that they mean that there is a lack of inventory for components on the OEM side because that is not what we are seeing on the aftermarket side. Parts never really saw an issue, and this is one of the calls that I got wrong when covid started. I assumed that parts would be the main issue, but it is finished goods and has been all along.

“If you want AC, you’ll have to wait four to eight weeks,” FOX Business’s Gerri Willis told “The Claman Countdown.”

Well, that depends on the type of AC. In my market for central ac, we have enough for “our guys” and the end users are subject to their availability. Could be a week or two just because it is Summer, it is hot, and everyone’s schedules are full just like always in the Summer. It isn’t a product availability issue for most items. Ductless mini splits, window airs and other stuff made “over there” is quite another story. We are taking care of “the family” and everyone else, well, they are getting penalized by not having a long term business relationship with a good distributor. All of my competitors are doing the same thing.

Demand for AC units is already surging ahead of looming droughts in the West and power grid issues in Texas.

Again, what type of AC units?

On the West Coast, some energy groups are warning that California is the U.S. region most at risk of power shortages this summer due to the state’s growing reliance on renewable energy sources like wind and solar.

So what? California has had a horrible and disastrous energy “policy” for decades. I don’t see what this has to do with the title of the article. I suppose it could be red meat for Fox’s readers by taking a gratuitous shot at wind and solar.

In Texas, recent power outages and rolling blackouts that left millions without heat or electricity have unmasked vulnerabilities to the state’s grid. Energy experts point out that hot weather could further strain the grid, with one grid operator urging Texans to conserve power and “reduce electric use as much as possible” for a few days after heat waves caused a significant number of generation outages.

Looks like filler to me, nothing here that relates to the title of the article. The writer is confusing an air conditioner shortage with a power issue.

As a result, more Americans are turning to air conditioning systems in order to prepare for the hot months ahead.

This makes no sense whatsoever. When people are hot, they want AC. If a factory has a process or workers, they need AC. Otherwise, you don’t.

Meanwhile, as more office buildings reopen following coronavirus shutdowns, the need to replace units that have been dormant for the past year – or to upgrade to cleaner air alternatives in a post-COVID world – is putting more strain on supplies.

Most of the companies that provide air cleaning devices have caught up with demand. Some units if not mothballed correctly will need replacing, but I haven’t really seen this as an issue, at least thus far.

Brad Dunn, vice president of marketing and sales of United CoolAir, tells FOX Business that fears of extreme weather and power outages to outdated or dull AC units have compounded to become the perfect storm for the industry.

This can’t possibly be a correct quote from Mr. Dunn as there is no such thing as a “dull” AC unit. I laughed at this one. Longer run times/cycles do induce wear and tear on units, and especially older ones. Hey, your car doesn’t drive a million miles (usually) and mechanical equipment in your domicile is no different. The dirty and unreliable power is a real killer as everything has circuit boards. We should sell far more surge and power protection devices than we do.

One heating and air conditioning corporation in Eastchester, New York, already has a waiting list ahead of the summer season after booming sales. AMHAC, a family-owned business that installs and repairs air conditioners, is still waiting on some key components such as sheet metal, motors, circuit boards, copper coils and engines that help the units start.

It’s Summer. Everyone has waiting lists. I am seeing no shortages in sheet metal, motors, or circuit boards. Coils (I assume they mean evaporators) are on allocation, but it is freeing up just a bit and as mentioned previously, we have enough for “the family”. I have no idea what an “engine that help the units start” is. That one is almost as funny as the “dull” AC unit.

Yet, it’s not only supplies that the company is waiting on: The workforce is also lagging behind. And according to AMHAC General Manager Natalie LLoyd, it’s an industry problem.

Absolutely true, and true for just about every industry right now.

Prices have increased over the past six months and are expected to continue to tick up, according to Dunn from United CoolAir. Component shortages are not the only source of blame: Rising costs of fuel and inflation are also being passed down to the consumer. In 2021 alone, prices have already risen 15%.

Prices are way up due to raw material pricing but I am starting to see copper and lumber start to go back down. Chemicals are all at super high levels. I think that some of this will start to decrease again after this surge in demand abates a bit. And yes, all of these price increases get passed along to the consumer.

Meanwhile, 68% of builders reported shortages of HVAC equipment in May 2021, which is delaying new construction and projects.

Builders maybe – but they don’t have the relationships with the distributors – the contractors do. New construction is a brutal and low margin business. My guess is that the contractors are using the units that they can get to repair and replace at existing homes and businesses, a much higher margin job. We don’t really play in the new construction end for a lot of reasons, but that is probably a pretty good guess. We had one home warranty company that we cut off when the manufacturing issues began last year – the margins were too low and the maintenance of that account too high. Our contractors are priority number one.

As HVAC manufacturers anticipate more Americans to lean on air conditioning, experts are encouraging customers to plan ahead and put in orders as early as possible. Even though homeowners, builders and office managers at the brunt of the shortage, it’s a boon for the manufacturers.

No idea what this means. Again, if someone’s AC isn’t broken, they typically won’t be calling.

21 thoughts on “HVAC and the Gell-Mann Amnesia Effect”

  1. I remember a discussion here about overseas shipping and how or why that got so messed up. Yesterday I read an article that gave me an ‘oh duh!’ moment. At the start of the pandemic most big ocean shipping companies immediately canceled about a fifth of their sailings with the anticipation that they’d need the reductions to keep their ships full. This had tremendous knock-on effects since the factories that expected a certain sailing from say, Shanghai, didn’t have one because that ship never arrived from Long Beach. I’m guessing the bulkier and lower-margin finished goods wound up at the back of the queue vs the denser loads of higher-margin parts.

  2. My guess is this “news article” originated with a press release from some HVAC industry and/or US Chamber of Commerce group, as the takeaway seems to be “hey, buy your new AC units now, don’t wait!” I guarantee you no one at Fox Business News did any actual reporting or interviewing for this story. Our media is completely and totally broken.

  3. The chip shortage means car dealer showrooms and lots are empty. Buy a new car now before it’s too late! Also, buy hundreds of rolls of toilet paper.

  4. I bought a new Trane unit in April anticipating trouble with my 20 year old Trane system. The new system was installed in a week. My most recent electric bill was half of last year’s. We just ended a week of 115 degrees. Glad I made the change.

  5. @Brian – I was thinking that it is entirely possible that some sort of artificial learning device did the article. Some of the terms and grammar are way off, and the fact that Raytheon and Avis were in there is just so extremely odd.

  6. That was painful to read even at my level of HVAC expertise, which extends all the way to “change the filter regularly”. Perhaps a dull A/C is one not connected to a smart thermostat?

  7. }}} New construction is a brutal and low margin business. My guess is that the contractors are using the units that they can get to repair and replace at existing homes and businesses, a much higher margin job. We don’t really play in the new construction end for a lot of reasons, but that is probably a pretty good guess

    It’s also a vastly overbuilt arena. Many cities have an excess of empty, unused commercial real estate, but a shortage of low-to-middle cost housing. I gather part of that is the current tax structure massively favors it, in which case the stupid structure needs to be overhauled, as there is a lot of commercial RE around here that has literally been “well underutilized” (aka “mostly empty”) since it was built 5-10 years ago. …And they keep building more, which is ridiculous. Moreover, I gather from some things I’ve read that this area is not atypical of that of any positive-net growth state.

  8. }}} Rising costs of fuel and inflation are also being passed down to the consumer. In 2021 alone, prices have already risen 15%.

    GEEEeeee… I wonder whose fault THAT could be…?

    Could it be…. SATAN?

  9. As Mike K. pointed out, the new units are considerably more efficient than the ones they replace. How much of that is realized in lower power consumption versus lower thermostat is debatable. In years past here in DFW, replacement units were often sold with upgrades to insulation and even windows. So the replacement units are probably a help to the power system on balance.

    In any case, I’d be mortified to be associated with that word salad twaddle and I’m glad I didn’t have to try to read it. Could you have missed the place where it said it was from the desk of President Biden? It rises to that level.

  10. In years past here in DFW, replacement units were often sold with upgrades to insulation and even windows.

    I actually spent another $1850. to have my ducts all tested and resealed. I’m sure that contributed. This all began with my inquiry about solar. I was lucky to get a guy who said the A/C was probably a problem and not to buy solar until I replaced it and saw the effect. If I do inquire about solar it will be that guy and not the idiots who call me everyday. Tucson is a natural but the solar industry seems to have been taken over by snake oil merchants.

  11. Mike K: “… the solar industry seems to have been taken over by snake oil merchants.”

    Sadly, the whole solar power industry is the product of snake oil merchants. While there are places where solar power makes sense — e.g., the oil & gas industry uses solar power to support wireless communications at remote well sites — the solar industry is mostly driven by subsidies empowering virtue signaling. The day is fast approaching when the already bankrupt US will no longer be able to afford direct & indirect subsidies for wealthy people’s solar installations, and the industry will die. Don’t count on those lucrative feed-in tariffs lasting much longer!

    This has happened before with solar. In the 1980s, California subsidized solar rooftop water heating, mostly for swimming pools. When the subsidy went away, so did that industry.

  12. It’s insane how many solar farms have gone up in the past year in New York state. They’re just throwing money at the industry. In a decade or so there’s going to be huge business in tearing the things down, and the circle of corruption will continue…

  13. Sadly, the whole solar power industry is the product of snake oil merchants.

    Almost all of it … the tell is when they emphasize the “green” characteristics over any practical benefits, and/or ignore the need for (not-ready-for-utility-scale) energy storage to realize the “dream”.

    I work with solar/advanced-battery tech, for off-grid applications where what/where it is being used justifies living with the costs and limitations. It would be real easy for me to jump on the Climate Change Cult bandwagon, but I also have seen what Brian describes (25 years ago, when GM recalled and destroyed their EV1s) and am not inclined to put my career on that wagon.


  14. Dan:

    I’m guessing that the phrase “engines that help the units start” is a bad paraphrase for the control relay assemblies usually referred to as a “motor starter”. The idiot (or bot) writing this had no idea what they were referring to, and assumed there was a separate motor (“engine”) that helped the electrical motor start.

    Just a thought.

  15. Blackwing1,
    You risk real damage to your brain when you waste the effort to try to make sense of modern journalism. It’s not like anyone in the chain between “reporter” to publisher is interested in anything but pumping out pixels. Trying to inject any sort of rationality or, God forbid, actual knowledge is like pumping energy into a black hole, it’ll never make its way out. You can feel brain cells dying just from thinking about it.

  16. @Blackwing1,
    As MCS mentioned, it makes my brain die, but I will go at this anyways.

    There aren’t motor starters on anything residential or multi family. As is standard in the article, they never really define and “air conditioner”. Are they talking about window airs? Central for a residence? Rooftop? Ductless mini split?

    As for “engines that help the units start” I suppose you could say a motor starter if you were talking commercial/industrial (even then, it is a stretch), but for the life of me I have no idea what this would mean if you were talking about the residential/multi family world.

    The more I look at it this could have been a bot that created the whole dumb article from a bunch of different sources.

  17. It is unfortunate, but there is a new development which awaits a name. I assume I know better than all the news stories. Of course I don’t, not having any sources whatsoever. I read a story and spot the implied bias, and then assume the opposite. The assumption is that everything is propaganda. Just like an ad for a product, one reads it with scepticism. Further, and this for me is a given, the writers have no expertise whatsoever. They are hired for their credibility, as one sees in all the so-called commentators, really actors and actresses, on television. The person behind this has an agenda, and this is often transparent. One might find objectivity in the ball scores, and maybe the weather.

  18. I’m not sure how this bears on the original post but I’ve been listening to ads from two different AC companies all day offering promotions on replacement systems in DFW. I don’t suppose they would be paying to promote something they can’t deliver. One repeats a mantra about how chancy availability is before they offer to throw in 20 inches of insulation for “free” without resolving the narrative tension.

  19. @MCS – there is availability for “the family” but outside of that everyone is on their own. Most likely the people running the ads either bought up, or have a solid relationship with a local distributor.

  20. Believe the “engine” that starts things up is the big capacitor on the outside fan motor.

    I have definitely heard starting capacitors referred to as “engines that start engines” but not specifically in the context of A/C.

    BTW: had mine replaced this spring … no shortage of those.

  21. @Dave Tufte — Yes, that was my thought, a capacitor for the fan motor. But that’s just more proof that the people or bots writing in the media haven’t a clue what they’re talking about.

    We take two newspapers, the local paper and the WSJ. The local one is all but worthless and I’d drop it but my wife likes reading it and marking the errors in red pen. As for the WSJ even it gives off the smell of wokeness and greenness frequently.

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