Gas

Article Dean Dorton

The complexion of the top 20 U.S. coal producers in the last five years has dramatically changed with the loss of eight companies from the list due to bankruptcies or sales. The drop in spot coal prices and decrease in natural gas prices, along with geological and regulatory challenges, contributed to these changes. Overall, U.S. production is down 17% during this time period. Spot prices across the four regions have dropped collectively approximately 35% with the steepest drop in Appalachia at 44%.

Dean Dorton continues to support the mining industry and stands ready to help mining companies navigate these challenging financial times.

Top Coal Producers, 2015 Tonnage (millions
1 Peabody Energy 177.9
2 Arch Coal 128.1
3 Cloud Peak Energy 75.1
 4 Alpha Natural Resources  72.0
 5  Murray Energy Corp.  55.2
 6  Alliance Resource Partners  41.2
 7  North American Coal  30.5
 8  Westmoreland Coal  30.3
 9  CONSOL Energy  29.3
 10  Luminant Mining  23.8
 11  Foresight Energy  20.1
 12  Kiewit Mining Group  18.2
 13  Bowie Resource Partners  12.2
 14  Patriot Coal  10.3
 15  Black Hawk Mining  10.1
 16  Sunrise Coal  8.8
 17  Armstrong Energy  8.2
 18  Coronado Coal  6.9
 19  Walter Energy  6.4
 20  Signal Peak Energy  6.4

Sources:

  • Mine Safety and Health Administration (MSHA)
  • National Mining Association (NMA)
  • U.S. Energy Information Administration (EIA)
  • S&P Global Platts

Article Dean Dorton

Question:

If you renovate a building used in your business this year, then is the expenditure a capitalized improvement or an expensed repair?

Answer: 

It is important to understand how the “unit of property” concept has changed regarding buildings. Before the new rules, only the building in its entirety was considered one unit of property. Now, as many as nine building systems can make up one building, and each system is its own unit of property.

The nine systems that can make up a building are as follows:

  1. Heating, ventilation and air conditioning (HVAC) systems
  2. Plumbing systems (pipes, drains, sinks, toilets, etc.)
  3. Electrical systems (wiring, outlets, lighting fixtures, etc.)
  4. All escalators
  5. All elevators
  6. Fire protection and alarm systems (sensing devices, computer controls, sprinkler heads, etc.)
  7. Security systems (window and door locks, security cameras, recorder, monitors, motion detectors, etc.)
  8. Gas distribution systems
  9. Other structural components (roof, walls, floors, etc.)

To follow the new Building Systems rules, you may have to plan more carefully before you renovate and keep detailed records during each project. However, these rules may also provide more certainty that an expenditure appropriately expensed as a repair will pass IRS scrutiny.

Contact your Dean Dorton advisor or Faith Crump at fcrump@deandorton.com or 502.566.1025 if you have any questions.

View Faith Crump’s Bio

Article Dean Dorton

Owners need to monitor the following risk areas to stay competitive in 2016:

  1. Cybersecurity
  2. Social Media
  3. Volatility of Gas Prices
  4. Mobile Technologies
  5. Food Service Competition
  1. Wage Rates
  2. Regulation Compliance
  3. Asset Theft
  4. Changing Demographics
  5. Increased Fuel-Efficiency
  1. Cybersecurity
    Cybersecurity involves the need to comply with PCI standards to protect cardholder information.
    This also includes skimming, in which devices are placed on pumps to steal credit card information. Procedures should be implemented to monitor the pumps and prevent and/or remove these devices.
  2. Social Media
    Social technologies are increasingly becoming a part of everyday life. Incorporating social media communications into the business model can improve customer service and provide a low-cost alternative to traditional advertising.
  3. Volatility of Gas Prices
    Decreases in gas prices nationwide have led to consumer confidence in the health of the economy, which will also benefit convenience stores with increased sales. However, the converse is true as well: should gas prices significantly increase again, then in-store purchases of snacks and drinks will drop. Additionally, Congress is looking at raising federal gas taxes to fund the nation’s aging highway projects.
  4. Mobile Technologies
    More than half of all buying is expected to occur on mobile devices; therefore, having mobile applications is crucial to achieving success. In addition, these mobile applications will provide ways of saving money and reducing human error.
  5. Food Service Competition
    Convenience stores that don’t invest in food services create the risk of losing out on business. The market for convenience store prepared meals is increasing as consumers desire diverse, affordable, convenient, and healthy food options. Convenience stores are uniquely positioned to meet this growing need if an adequate investment in food service is made.
  6. Wage Rates
    The growing pressure to raise the federal minimum wage will increase the number of part-time workers, so businesses can keep the cost of labor low and avoid certain benefits. Additionally, there is a federal proposal that salaried individuals who earn less than approximately $50,000 per year be potentially eligible for overtime, which will impact convenience store managers and raise labor costs. This change to overtime pay should be in place by 2017.
  7. Regulation Compliance
    There is an increase in regulations in a variety of categories, including e-cigarettes and other vapor products, diet drinks, energy drinks, and dietary supplements. Increased regulation may result in higher prices for those products or a ban on the products altogether. In addition, menu-labeling regulations taking place in 2016 will require increased menu-labeling that will likely cause consumers to avoid lower quality or less healthy food options, thus decreasing food sales. Convenience stores must also comply with regulations regarding sales of alcohol, tobacco, and lottery tickets or face serious fines and penalties.
  8. Asset Theft
    A persistent threat to convenience stores is employee theft of cash from registers and customer theft of inventory from the shelves. Review and monitoring procedures should be implemented to prevent and detect these threats.
  9. Changing Demographics
    The workforce and general population are becoming more ethnically diverse and growing older. Demographics will change dramatically in the future as people live and work longer and as the percentage of other cultures in the U.S. increases. This will affect how convenience stores operate internally and how they reach a much more diverse marketplace.
  10. Increased Fuel-Efficiency
    Vehicles are becoming increasingly fuel efficient, which means fewer stops at gas stations to fill up the tank. This results in fewer opportunities for consumers to visit convenience stores and make purchases. The use of reward programs and other tools are needed to drive inside sales.

Sources:
www.csnews.com
www.nacsonline.com
www.petrolplaza.com

For more information, contact Bill Kohm at bkohm@deandorton.com or (859) 425-7625.

View Bill Kohm’s Bio