Water world

The massive earthquake that hit China in May and left more than 69,000 dead pulled the world's heartstrings - and pocketbooks.

And now the aftermath's reached local water bills.

Odessa's water rate increased 3 percent Tuesday. That's about $3 extra on a family of four's monthly bill. City Council members approved the rate increase in August to cover rising electricity and personnel costs, but skyrocketing chemical costs were the real culprit.

City Purchasing Director Mark Simpson said he starting having a hard time finding sodium hydroxide for the water treatment plant back in June. That was right after China's big tremor prompted a huge rebuilding effort, which, along with the country's many other building projects, has sucked up a lot of the world's raw material supply.

Then there were the significant cost increases for alum and liquid ammonium sulfate, two chemicals used in the plant's cleaning and disinfection process. Utilities director Debbie McReynolds said alum's price increased 105 percent during the 2007-'08 fiscal year.

There's no real way to get around paying whatever the market demands for these chemicals, McReynolds said.

So residents will just have to sit back and hope that the world's raw material supply crunch doesn't get worse.

"This makes it very limited, not only to the point that the cost has gone up," McReynolds said Wednesday. "We have even been concerned about whether or not we would even be able to purchase what we need."

Simpson said the world's raw material shortage has affected the city's bottom line in nearly every department. He said these are the worst price increases he's seen during his 19 years as an employee.

"In general, Asia is consuming much greater amounts of chemicals," said Mike Standish, innovation manager for AkzoNobel, a Chicago-based chemical supplier. "Five years ago we would see a lot of imports from Asia that helped lower prices. Now Asia's demand has exceeded its supply capability, putting a supply crunch on raw materials."

According to a report published by Atradius, one of the world's largest credit-management firms, copper prices increased by 560 percent from 2002 to 2006. Last year China bought up 37 percent of the global steel supply - the United States had 10 percent.

Surging oil prices don't help the situation either. Odessa's fuel and vehicle maintenance costs are expected to rise by $1.34 million in 2008-'09, and transportation expense is a factor in the chemicals dilemma, McReynolds said.

The city added escalator clauses to all its chemical contract bids two years ago because markets starting getting so volatile, Simpson said. Now chemical suppliers are required to justify cost increases with paperwork proving that price hikes are an industry standard.

Simpson tacked on another $334,000 to the water treatment plant's chemical purchasing budget for 2008-'09 and hopes that will cover everything.

"Hopefully we asked for enough, but until we know how the markets are going to turn out in the coming months, it's hard to say for sure," McReynolds said.

BY THE NUMBERS:

>> 34 percent: Utilities budget increase for chemicals. The department plans to spend $965,200 this fiscal year.

>> 56 percent: Cost increase of water treatment chemical sodium hydroxide in 2007-'08.

>> 105 percent: Cost increase of water treatment chemical alum in 2007-'08.

>> $2.5 million: This year's water treatment plant filter replacement project.

>> $14.4 million: What it should cost to purchase water and run the treatment plant in 2008-'09.