Cost Meter

When the 900 gallon oil tank ran out a few weekends ago, I began the mundane task of collecting the historical data on our energy costs (electric, oil, and propane). Why - to figure out how to save energy with oil prices going up and up.

During my years at Accenture, one of my functional areas of expertise was cost accounting. Working with Newport steel, analyzing the volume, rate and mix variances was the practical delivery of those accounting courses I took at Miami.

So applying this dormant skill, I set about looking at all the historical variances in my utility costs. The key to measuring anything is what actions or changes does it cause in your behavior. Another added benefit is to validate any prior economic assumptions (e.g. was the extra investment in the insulation of our roof worth the benefit in lower energy costs).

The trouble with costs is they are difficult to measure. First - it is a detailed, mundane, ugly and time consuming task. Second- so many costs are indirect. Third - many costs are hidden (and in some cases on purpose).

Driving is a good example. R.M. always said that our behavior would change if on the car (like a taxi) there was a cost meter. Like the utility meter on the house (except calibrated in dollars), it would spin away for each trip. Maybe our behavior would start changing when we discovered the extra trip somewhere added another $8 for the day.

What if we all had a cost meter (like a watch) attached to our body. As we walk around the cost meter shows what we are spending. Sitting here at home the meter reads $20/day (electric, oil and propane only). It reads $250/day (I made that up) fully loaded (mortgage, telephone, maintenance accrual, cable, taxes, insurance etc.). But that is split between 3-4 people (and any guests). Hmmm .... just like cost accounting it becomes complicated.

Life is costly and complicated - but it is worth the price.