President Obama talked to students and other Floridians at the University of Miami on Thursday to reiterate a major item from his State of the Union address last month --what he calls an all-of-the-above approach to energy.
But how exactly do energy costs impact Americans?
Groceries, car payments, medical bills -- there are many items that the average American family budgets for each year. Increased electricity bills shouldnt be another item added to this list of growing and burdensome living expenses. However, more than half of U.S. households now devote more than 20 percent of their family budget toward energy costs, which means less money to go toward education, food, or clothes.
According to a study commissioned this year, the 60 million American households that earn less than $50,000 per year -- thats half of all U.S. families -- will devote an estimated 21 percent of their incomes to energy bills, compared to just 12 percent in 2001.
What might be surprising is that electricity is the bargain among all consumer energy products. This is due, in part, to the utility industrys reliance on affordable coal. Electricity prices have increased by 51 percent in nominal dollars since 1990, while the nominal prices of residential natural gas and gasoline have nearly doubled and tripled, respectively.
So what caused these energy cost increases? A variety of things like increased regulations, growing demand, and international conflicts. Many of these are beyond what anyone can control. Any unforeseen increase in utilities costs can be hard for families to bear in general -- but during a recession, its a killer. From the study, we were able to get a better idea of which demographics are hit hardest by these price increases.
- The poor: Energy cost burdens are hardest on the poorest families. For families earning less than $10,000 a year, 78 percent of their after-tax incomes goes to energy bills. Life is hard enough attempting to eke out a living and provide for a family -- should keeping the lights on be so difficult?
- Seniors: Seniors on fixed incomes are also struggling with these increases. Planning for retirement is already challenging -- the expenses that come with old age are trying for Americans. Unstable electricity prices make planning even more difficult.
- Minority households: More than 60 percent of black and Hispanic families had pre-tax household incomes below the national average in 2010, meaning that this group is disproportionately impacted by these increases.
A recent slew of EPA regulations stifle the coal-fueled power industry and will mean more electricity rate increases, high bills and less money to spend elsewhere. These regulations have put more people out of work as coal-based electric utilities have closed. Inevitably, this leads to a rise in prices as the supply of electricity shrinks and demand increases. As a result, families suffer.
Coal provides jobs directly and indirectly across the country. It reduces costs for those in need, who need it the most. Its been the hallmark of American energy for decades. And in times like this, we need it now more than ever.
Steve Gates is the national communications director for the American Coalition for Clean Coal Electricity.
