Thursday, January 14, 2016

Winter Weather

Winter Weather
Brock Hohman
The winter season has officially started, with snow, ice, and slush covering the roads, drivers are having to be much more cautious while commuting. Cities are busy plowing roads, salting streets and making sure the roads are in the best conditions possible. This time of year puts everybody in a more stressful mood while driving, and puts local tow services on high alert. The winter weather brings big economic change for people living in northern states.
There are many businesses that thrive this time of year and rely on snowfall and winter weather to make money. Two services that have a higher demand in the winter months are snow plow services and tow truck services. Without snowfall the snow plows have nothing to do and are reliant on snowfall to get paid. On the other hand, the tow truck services are active year long, although during the winter months they have a surplus of customers that need assistance since accidents are easier to get into with tough road conditions.
From 2004-2013 there were 1.25 million weather related auto accidents throughout the United States. The main cause of these accidents were snowy roads and icy roads with a total of 907,000 accidents. That’s 72% of all weather related accidents are caused by winter conditions which is a pretty large portion considering that there are limited months out of the year that these conditions are relevant in the United States.
Another economic change that winter weather brings affects insurance companies. With the high rate of accidents occurring, people are making plenty of insurance claims and insurance companies are benefitting greatly. Although they may be more busy during these months, they are making much more money which is worth the a few extra hours in the office. This is the insurance company's opportunity cost because they are at work longer instead of being at home with their families.

19 comments:

  1. The seasonal increase in demand produced yearly by winter weather is predictable and relatively constant. It would have been interesting to hear how the firms whose services experience increased demand in the winter choose to take advantage of this. While most firms would increase their production capacity, by acquiring more capitol and human capitol resources, to take advantage of the increased demand, perhaps some companies maintain a constant level of output and instead take advantage of the increase in price a rise in demand will produce with a stationary supply curve. What action a company takes will be decided by what type of market a company operates in as well as the price of production factors and the economies of production a firm experiences.

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  2. It is clear that many companies rely on the intense winter months for their business just like many companies rely on the warm summer months. It would interesting to see what companies took a hit due to the extremely warm weather and lack of snow we received in December. I'm sure tow trucks and snow plows were slow in business because of the warm weather.

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  3. It is really interesting to know that 72% of accidents are caused by the winter weather conditions. A lot of people don't take it easy on the slippery roads because they are in just too much of a rush to care, and then an accident occurs. I know myself, I do not like driving in the winter weather conditions because my car isn't very good in this type of weather.

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  4. It's an interesting topic that this brings up, but it's so true. I know that just this month (and we're only 14 days into it), I've seen about 3 tow trucks with vehicles on them. I never really thought about it being a big season for the insurance companies though. It makes sense, but I guess I just didn't think of it like that. It wasn't mentioned in the blog post, so I have to ask. Do the tow truck companies jack up their rates for the winter? I feel like they would just because they have something like an oligopoly. At least, in the winter.

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  5. This comment has been removed by a blog administrator.

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  6. I agree with Isabel. How do warm winters like last years impact businesses? I'm sure lot's of mid western people despise the snow, but it's interesting to think about what would happen if we didn't have any, seeing how a lot of people rely on it to make money.

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  7. With this cold weather finally setting in the and people getting in more accidents, people are more stressed while on the road. The snow plowers don't get paid a lot, I'm not sure how much, I looked it up but didn't find much.

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  8. Having good insurance definitely pays off in winter. With such a high risk of accident and injury, the marginal cost of the price of insurance is by far outweighed by the marginal benefit of the comfort and protection from insurance. Consumers have more incentive to get quality insurance in when the weather is bad and accident rates are up.

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  9. Hey Brock, thanks for the weather report I really enjoyed it. "Two services that have a higher demand in the winter months are snow plow services and tow truck services. " I never would have know these facts without you. thanks for the post!-Tyler Hull 1/15/16

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  10. Now that we are in the middle of the winter you see more and more companies changing what they sell and supply. We see this almost everywhere. Clothing stores change the clothing they sell, Fast food places deliver to the consumers want of seasonal dishes, and the cities and villages increase the number of street cleaners and plows they have. This all happens because of the consumers need and want. This winter has not been as icy and snowy so the village of pewaukee hired a few less plow drivers this year.

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  11. Colder weather always yields demand for more services for drivers and commuters. Not only does it affect services like plowing and towing, but it increases the demand for seasonal products. At the end of the winter season, many stores have huge end-of-season sales to get rid of the products that are no longer needed. This change in demand through the seasons probably does not affect warmer states; however, warmer winters cause problems for companies that specialize in cold weather services. Overall, seasonal changes have a huge impact on the economy and consumer trends; new conditions create new needs for consumers.

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  12. I found it really interesting when you mentioned the insurance companies and how they are effected during the winter months because of the high probability of auto accidents. I am currently working with a healthcare company on a business project and that is one thing that I never thought to take into an account. I wounder whether or not their rates go up during the winter months because of the amount of injuries that are caused by accidents on icy roads. Overall, I thought the topic was very interesting because it was something that I am very aware of, however, never really thought that deeply about before.

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  13. I believe this there the same idea of higher demand in other seasons also. In the summer there is a high demand for boats and water park tickets. In the fall there is a high demand for turkey and pumpkin spice lattes. I believe with any company their demand goes up during a season. Not even just in seasons but even in select time frames. Health insurance companies are in high demand in the open enrollment season. In conclusion there is high demand for every business in a selected time frame.

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  14. The snowy weather means that people on the roads are going to have to be more cautious. This is my first year that I will actually be driving in the snow and I am sure I will be very stressed from it just like all the other drivers on the road. Since the snow causes people to become stressed, it could be a reason on why so many accidents are caused in the winter. When you said that about 72% of accidents occur in the winter, I was astonished because I didn't realize that so many accidents were caused in the winter considering that winter is usually about three months. To go along with this, you could have found out which age group causes the most accidents in the winter. For example, I feel like the new drivers could be a large portion of the accidents since the young drivers do not have as much experience driving in the snow. Overall this post was very well written and had some surprising facts.

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  15. This is an interesting topic to talk about pertaining that the fact the winter is already hear. In which we never thought that it was actually coming. I like how you talk about how the winter benefits small companies. But to make this post better it would it would have been cool to see how much these companies make and how big the benefit is. Also I like how you talk about how this helps out the insurance companies because they are then able to raise rates in which the consumer gets into an accident. Overall great job on your blog post.

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  16. It is interesting how many companies really do rely on the weather and the cold, winery months of the year. This year, in Wisconsin, especially in our area, I believe that these companies that rely on these factors were not doing so well during the November and December months where snow was supposed to fall. Since it did not snow till January, these companies probably lost a lot of money and were very grateful when it did start snowing in January. I wonder if it still hasn't snowed, would all these companies be shut down? They would definitely have to let workers go if they did not have any business.

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  17. Winter months are always the scariest when it comes to driving because of the condition of the roads. I agree that snow plow drivers are in a high demand during the winter months. There are of course those individuals who don't take the condition of the roads into consideration when they are driving at that is when the accidents start to happen which creates the higher demand for tow truck drivers. I didn't think about the insurance companies being affected but that was a good point because of the increase in accidents during these winter months. I see snow plows all the time when I am driving. This will be my second year of driving in the snow and it's not fun at all. Driving and seeing other drivers in the ditch it's scary, but that's why we have the snow plows to try and prevent that from happening. These drivers have a seasonal job, which means they only have a job when it's winter.

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  18. Winter months seem like the longest of the year, although it's only 1/4 of it. That's why I was so surprised when you said that 72% of accidents occur during this time. I think it's interesting that demand goes up so much for snow plows and such during these times. It makes sense since it is definitely a need, but I wonder how that demand changes when we have mild winters like this current one. Do they just not have a job then? It would be interesting to see the effect that the mild winter has on plow men. Overall great article!

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