By Lauren Fix, The Car Coach
The electricity price increase of 15.8 percent is the highest since August 1981. This is just in one year, according to the US Bureau of Labor Statistics. Natural gas bills, which crept back up last month after dipping in July, surged 33 percent from the same month last year, labor data released last week. You may have noticed lower gasoline prices over the last few weeks. Even with that drop, total energy costs were still about 24 percent above August 2021 levels.
There are a few factors that will cause home heating bills to double. Electricity costs are relentlessly climbing because prices for the two biggest power-plant fuels, natural gas and coal, have surged in the last year as the US economy rebounds from the pandemic and as Russia’s war in Ukraine triggers an energy crisis in Europe. Another factor is the hot and humid summer across most of the lower 48 states drove households and businesses to crank up air conditioners. Americans likely used a record amount of power in the third quarter, according to US Energy Information Administration projections.
A recent report from Nerd Wallet states that Americans are spending $11,500 more in a single year, but grasping what big numbers like that mean in practice can be difficult. Per month, you’re looking at close to $1,000 more month. For many people, this is an entire extra rent or montage payment. Across all the spending categories they examined, groceries, shelter, and gas stand to rise the most. Throughout all of 2022, inflation has cost Americans to spend more than $1,200 on groceries, $1,400 on housing, and $2,500 on gasoline.
New York’s state grid operator warned of a sharp rise in wholesale electric costs expected this winter with spiking global demand for fossil fuels, lagging supply, and instability driving up oil and gas prices. Geopolitical factors are ultimately reflected in wholesale electricity prices and supply charges to consumer bills, per the New York Independent System Operator.
Electricity price futures for this winter have increased fourfold from last year, with prices averaging near $200 a megawatt-hour, the grid operator said. That has been driven by natural gas futures for the upcoming winter, which are more than double current prices to nearly $20 per million British thermal units.
According to the Lipow Oil Association, the energy crisis will make all forms of energy more expensive. They stated that the release of the oil reserves has caused gas prices to lower temporarily. OPEC is producing 3.5 million barrels of oil less, and all this will lead to higher prices. Remember the US is selling some of its oil reserves to other countries including China. Now the Strategic Oil Reserves are at the lowest point since 1984 and now have only a few weeks of fuel in case of a disaster.
With the reduction of oil production, less coal and natural gas mining, and permits we are lining ourselves up for some serious issues. None of what I just discussed will get more oil out of the ground as the world uses more and the demand remains high. Watch, after November’s election, gas prices will rise again with perfect timing.
There is so much more to discuss on this, put your comments below and let’s start the conversation.
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Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.
Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on ABC.com with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak.
Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum and Juror / President for the North American Car, Utility & Truck of the Year Awards.
Check her out on Twitter and Instagram @LaurenFix.
