|
|
As U.S. gasoline prices fall, electricity prices are on the rise, climbing 15.8 percent year on year in August, the biggest 12-month leap since 1980, according to the U.S. Bureau of Labor Statistics.
Some electric utilities have literally doubled their electricity prices to consumers this year after winning permission from their public utilities commissions to do so.
Much of the price hike is due to increases in the cost of natural gas, which fuels the production of 37 percent of U.S. electricity.
Also, heat waves across the southern and western U.S. have boosted demand for electricity to run fans and air conditioners, which, in turn, has raised demand for natural gas.
Natural gas prices are up a third in the U.S. over the past 12 months.
The rise in price is due partly to oil companies’ loss of production during the COVID shutdown and major producers’ decision not to boost production as demand returned, as we reported in “Oil Majors Withhold Investment in New Production” (3 Aug 2021).
Also, the U.S. is liquefying and shipping record amounts of natural gas to Europe to help offset the region’s loss of supply. Russia has shut off key exports to Europe in an attempt to break Western sanctions imposed because of the Ukraine invasion.
U.S. electricity consumption will increase 2.6 percent this year, government forecasters predict.
TRENDPOST: Rising energy costs are a critical factor fueling inflation: every retail, service, and manufacturing business uses energy, spreading its rising cost throughout the economy.