September/October 2007 Editorial: The Rising Cost of Home Energy
There’s a second rising cost of home energy: the prices of the electricity, natural gas, and oil used to operate American homes. These increases are less visible because the local price of electricity doesn’t typically appear on national news or posted along the highways. Energy cost increases are also more gradual so, again, less likely to make headline news.
Natural gas and electricity prices aren’t likely to skyrocket like gasoline but I can see reasons to expect a continuing, steady rise. It’s easy to blame those increases on the uncertainty in the Middle East, Africa, or South America but the larger problems are closer to home. That collapsed bridge in Minnesota signaled the dilapidated condition of our highway infrastructure. America’s aging power plants, pipelines, and overburdened transmission network desperately need replacement but few consumers realize how these necessary investments will impact energy prices. If we are clever we might be able to coordinate infrastructure renewal with a transition to greater reliance on renewables (and efficiency). I am watching to see how utilities, regulatory commissions, and other players address this really tough nut.
There is also the rising cost of home energy conservation. This is the additional cost to build an energy-efficient home, retrofit triple-glazed windows, or the premium on more efficient appliances. Sadly, we can’t tell you how rapidly these costs are rising. Electricity and natural gas are well-defined products but energy efficiency is a complicated bundle of services, materials, and information (such as this magazine). We like to think that the costs of saving energy are rising less rapidly than energy because we are getting better at what we do. On the other hand, building or retrofitting an energy efficient home is labor intensive, so the pressures to increase prices (such as paying for health care, workers compensation, and insurance) are different than for oil or electricity.
Mitigating climate change provides a long-term justification for saving energy but economics is much more important in the short term. That’s why it is important to take into account all of the costs of home energy.
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