In the midst of an energy boom, electricity prices spike

posted at 2:31 pm on December 28, 2013 by Jazz Shaw

Here’s something of a mystery for all of you amateur sleuths out there. As has already been determined, America is experiencing a fossil fuels energy boom unlike any in living memory right now. Just yesterday, Erika ran down some of the numbers, with significant expansion being seen in domestic production of shale oil and natural gas. In the midst of all this plenty, you should all be kicking back and enjoying those sweet, lower energy bills, right?

Oddly enough… no.

In November, the Bureau of Labor Statistics’ Electricity Price Index hit 202.284, an all-time record and nearly 20% higher than just six years ago.

This might strike some as strange, given the private-sector shale-fracking boom going on in the Midwest, Northeast and Texas, which has led to soaring new domestic supplies of natural gas and oil.

According to the U.S. Energy Information Administration, as recently as 2008 the U.S. produced 2.1 billion cubic feet of natural gas per day. Today, it’s 12.3 billion cubic feet and growing fast — truly astounding growth.

Meanwhile, the U.S. is on the verge of producing more oil than it ever has, and domestic sources now outstrip foreign ones. Thanks to fracking, more’s on the way.

But as energy booms, electricity prices are going up.

Huh. So I guess all that supply and demand malarkey they fed us in high school was just capitalist propaganda after all, eh? I mean, what could account for your electricity bills going up if the supply is more plentiful? Unless, of course, the invisible hand was being held in invisible handcuffs due to somebody’s thumb being on the scale.

What’s really at work here is simple: Through unnecessary regulations, government has destroyed another working market, telling us what kind of energy to use regardless of cost — based solely on the green movement’s moral beliefs about what kinds of energy are “good.”

Electricity is now one of the most regulated goods in the U.S. Thanks to the Environmental Protection Agency’s sweeping powers to regulate C02 — a power we can’t find anywhere in the Constitution — electricity is becoming a very expensive commodity.

And it’s about to get even more so. According to the Institute for Energy Research, EPA rules put in place to please environmentalists will remove 34,705 megawatts of coal-based energy capacity off our market.

Think about it: That’s equal to about 10% of what we now produce with coal being removed from the grid.

With the government “leaning forward” this way, they have vastly outpaced the ability of the industry to adapt. There were plans in place already to retire a number of coal fired plants over the next few decades, replacing or converting them to the cheaper, more plentiful natural gas supplies now available. But by leaping in with all of these regulations being dumped on the industry all at once, the available supply is dropping even as we swim in an ocean of fuel. And the prices go up to match.

That’s not the only area where you need to be concerned, of course. The Renewable Fuel Standard continues to mandate that increasing amounts of ethanol be put in your gasoline, lowering efficiency and in some cases, causing long term engine damage. But while traveling this week, I did see a sign of the times which shows that the free market works. There is a demand for gas without ethanol, and retailers have noticed. Keep your eye out for more of these in the near future.

OLYMPUS DIGITAL CAMERA

There were a number of people who came after us, choosing to gas up at the non-ethanol pumps, even though the gas cost ten cents more per gallon. If you’d like to find stations near you where you can buy ethanol free gas, go here.


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That ought to make those electric vehicles look might appealing?

Socratease on December 28, 2013 at 2:33 PM

This couldn’t have anything to do with it, could it??

And it isn’t a mere’spike’ It is like climbing Mt. Everest, and staying at the top until you starve and freeze to death.

LegendHasIt on December 28, 2013 at 2:43 PM

Why should electricity be any different than any other commodity that’s been increasing in price? What do you expect when we’re printing money at the tune of billions of dollars per month?

HiJack on December 28, 2013 at 2:45 PM

Errrr, the EPA is backing off heir ethanol demands.

http://reason.com/blog/2013/11/15/epa-recommends-reducing-ethanol-demands

jawkneemusic on December 28, 2013 at 2:54 PM

Why should electricity be any different than any other commodity that’s been increasing in price? What do you expect when we’re printing money at the tune of billions of dollars per month?

Yep, about 85 billion a month.

lfwest on December 28, 2013 at 2:54 PM

I hate these floating ads. They’re making it very annoying to view Hotair on an iPad.

jawkneemusic on December 28, 2013 at 2:55 PM

In the economically inept golden state, a decree that an ever increasing percentage of electricity generation will be from ‘designated green sources’ regardless of cost over the next several decades. The most fascinating part of the decree is that the word ‘renewable’ does not mean what you might think it means. For example, hydro-electricity is NOT considered a renewable source for the purposes of this decree.

This wonderful policy means that California will lead the country with an economically unviable situation for decades to come!

Freddy on December 28, 2013 at 2:57 PM

Time to switch to private generation.

The democrats are systematically destroying every public institution. Now they’re ruining power companies.

Either you fix the issue with the EPA… good luck… sit in the dark like the north koreans… or privately generate.

Pick one.

Karmashock on December 28, 2013 at 3:03 PM

Of course they are going up. The States regularly mandate a green quantum, usually 20%. With windmills having efficiencies of 1% or less, and solar with a 20% efficiency at peak, the cost of capital increases dramatically. Add to that the infrastructure requirements of the alternates, plus the 100% re3maining infrastructure redundancy, and you have increased cost of delivery dramatically.
Then there is the reverse economic incentives of the modern age. This vanity requires that the consumer not use much of the product sold. Usually by mandatory green additions to the home, by rationing, or other legislative devices. Because the infrastructure cost must remain at 100%, the unit cost invariably rises.
The liberals have essentially destroyed all efficiencies of production by a huge misunderstanding of basic economics. Substituting in its place wishful thinking.

pat on December 28, 2013 at 3:06 PM

ObamaRecession

albill on December 28, 2013 at 3:07 PM

If/when we take the White House in 2016, can you imagine the economic boom once the Executive Branch is not weighing down energy through decrees and departments?

Sekhmet on December 28, 2013 at 3:07 PM

I hate these floating ads. They’re making it very annoying to view Hotair on an iPad.

jawkneemusic on December 28, 2013 at 2:55 PM

All over the web. And i can’t fiqure out how to block them or even ‘x’ them out on ipad.

pat on December 28, 2013 at 3:08 PM

Obama and Democrats obviously care about the little people. Or something.

22044 on December 28, 2013 at 3:15 PM

All over the web. And i can’t fiqure out how to block them or even ‘x’ them out on ipad.

pat on December 28, 2013 at 3:08 PM

See if No Script does it for you.

I don’t have the problem and I’m pretty sure it’s thanks to No Script. No matter, No script offers excellent protection against the unexpected.

Shy Guy on December 28, 2013 at 3:18 PM

And in the midst of a semi-depression, with massive unemployment, energy prices ROSE, against all economic principles. That’s some great leadership coming out of the white house. But then, it’s quite likely intentional. Cho WANTED $7 gasoline.

paul1149 on December 28, 2013 at 3:18 PM

Shy Guy on December 28, 2013 at 3:18 PM

Oops. Ipad. Nevermind.

Shy Guy on December 28, 2013 at 3:19 PM

Every time it go to Oklahoma I top off with real gas. I cannot find 100% gas in Texas.

txhsmom on December 28, 2013 at 3:23 PM

Why I sit in a dark house: The electricity is too damned high.

Philly on December 28, 2013 at 3:33 PM

David Axelrod is in with huge power companies. Coincidence?

OxyCon on December 28, 2013 at 3:37 PM

Just passed a service station that caters to marina customers advertising ethanol-free fuel near Cocoa Beach, FL.

With the economics of owning a boat already less than favorable, I imagine it would burn you up having the lifetime of your engine artificially shortened due to some bogus regulations.

Love it.

dmbream on December 28, 2013 at 3:38 PM

I hate these floating ads. They’re making it very annoying to view Hotair on an iPad.

jawkneemusic on December 28, 2013 at 2:55 PM

I surf on Chrome with Ad Block plus, Disconnect and Ghostery add-ons. I don’t see many ads or widgets.

tdarrington on December 28, 2013 at 3:38 PM

Electricity prices will necessarily skyrocket…

You don’t have to be energy efficient, the government won’t force you to be energy efficient, they’ll just make you want to be energy efficient.

After all they’re BeterThanYou!

tdarrington on December 28, 2013 at 3:42 PM

I don’t get why this administration is so hateful of the American people. They’re doing everything they can to drive us into poverty.

sadatoni on December 28, 2013 at 3:55 PM

The law of supply and demand can not be legislated or regulated away. Electricity prices are doing just what Obama predicted they would do, when you shut down a bunch of coal fired power plants.

JimK on December 28, 2013 at 3:59 PM

I don’t get why this administration is so hateful of the American people. They’re doing everything they can to drive us into poverty.

sadatoni on December 28, 2013 at 3:55 PM

It is all to drive popular uprising against “evil” energy companies to justify government takeover.

“Democracy” movements are a favorite of Socialists. They make people think they are making a democratic decision to solve a problem, be it bad energy companies or bad insurance companies, etc. The result is to concentrate wealth and power in the hands of the political class. The beauty is, the people are never better off, the problem is never solved, but the government is never the source of the problem. The problems of the people are all caused by others, and the solution is always to grant government more power and control.

tdarrington on December 28, 2013 at 4:04 PM

I expect my local electric utility will be spending lots of money constructing natural gas generating stations and taking their coal-fired plants offline. So any savings we consumers might see as a result of the production boom – are gone. Thanks EPA.

Obama’s government is driving the cost of electricity, gasoline and healthcare up – which leaves many of us with very little disposable income. And that’s good for the economy. /

Hill60 on December 28, 2013 at 4:12 PM

The law of supply and demand can not be legislated or regulated away. Electricity prices are doing just what Obama predicted they would do, when you shut down a bunch of coal fired power plants.

JimK on December 28, 2013 at 3:59 PM

It’s all part of Obama’s “pay your fair share” mentality. He’s here to bring the pain to middle class Americans who he feels have had it too good for too long.

OxyCon on December 28, 2013 at 4:15 PM

According to the U.S. Energy Information Administration, as recently as 2008 the U.S. produced 2.1 billion cubic feet of natural gas per day. Today, it’s 12.3 billion cubic feet and growing fast — truly astounding growth

Well at the link below you can see in 2008 US production was about 20 TRILLION cubic feet per year and this year is proabably around 25 trillion cubic feet or about 68 billion cubic feet per day.

http://www.eia.gov/dnav/ng/ng_sum_snd_dcu_nus_a.htm

A 25 % increase in 5 years is impressive but the numbers quoted are simply not realisitic.

KW64 on December 28, 2013 at 4:16 PM

If/when we take the White House in 2016, can you imagine the economic boom once the Executive Branch is not weighing down energy through decrees and departments?

Sekhmet on December 28, 2013 at 3:07 PM

It will take over 3 years to undo even the least bit of this nonsense. And that is if overturning any of this is a high priority for the next President.

As a perfect example, the Executive Order Obama signed that said all Federal Agencies had to sit down and play nice with unions and have touchy feely meetings took almost three years to trickle down to my level, Three years from when he signed it.

So, don’t expect miracles when the next President sits down and starts trying to undo stuff.

Johnnyreb on December 28, 2013 at 4:19 PM

I hate these floating ads. They’re making it very annoying to view Hotair on an iPad.

jawkneemusic on December 28, 2013 at 2:55 PM

Check out this post on yesterday’s QOTD and it might help you.

Anti-Control on December 27, 2013 at 11:03 PM

Barred on December 28, 2013 at 4:25 PM

You know what’s funny about this? (to me and my co-workers in the nat-gas biz, at least)

Even though there is a ridiculous oversupply of nat gas in this country, and it should be cheaper than dirt, the Feds, by killing coal and nuclear, have pushed (and are still pushing!) nat gas prices far, far, higher than they have any right to be, and oil prices, too!

Thank you Obama and the EPA, for making us rich! Sorry about the rest of you citizens.

Tom Servo on December 28, 2013 at 4:30 PM

When leaning forward means bend over and take it.

No Truce With Kings on December 28, 2013 at 4:31 PM

Necessarily….

bgibbs1000 on December 28, 2013 at 4:32 PM

Tom Servo on December 28, 2013 at 4:30 PM

The solution is natural gas export which has been stymied by slow walking the approval process. Once that gets going full steam, the economic loss of shutting down coal and nuclear power plants to be replaced with more expensive natural gas ones will become more obvious. You can make a lot more money selling gas at European and Japanese price levels than you can by burning it to make electricity here.

KW64 on December 28, 2013 at 4:43 PM

Isn’t the only hope for the planet that the industrialized civilizations collapse?

Isn’t it our responsibility to bring that about?

—Maurice Strong, founder of the UN Environmental Program – Opening speech, Rio Earth Summit, 1992

Any more questions?

iurockhead on December 28, 2013 at 4:51 PM

Well Obama did promise us that our electricity rates would naturally skyrocket under his administration.

This is a promise he kept!

Now it is time to look at that home fuel cell that runs on natural gas… drop one grid for another.

ajacksonian on December 28, 2013 at 4:52 PM

The solution is natural gas export which has been stymied by slow walking the approval process. Once that gets going full steam, the economic loss of shutting down coal and nuclear power plants to be replaced with more expensive natural gas ones will become more obvious. You can make a lot more money selling gas at European and Japanese price levels than you can by burning it to make electricity here.

KW64 on December 28, 2013 at 4:43 PM

This Administration is also slow-walking or blocking coal and oil exports.

It’s as if they don’t want us to recover and see the sort of economic growth that typically follows recessions.

Adjoran on December 28, 2013 at 5:10 PM

America is the pre-fracking boom ‘Saudi Arabia’ of coal. Coal is as important to our economy as oil is to theirs. Opposing the safe and efficient use of coal will be an act of treason in my administration.

Knott Buyinit on December 28, 2013 at 5:10 PM

“Democracy” movements are a favorite of Socialists. They make people think they are making a democratic decision to solve a problem, be it bad energy companies or bad insurance companies, etc. The result is to concentrate wealth and power in the hands of the political class. The beauty is, the people are never better off, the problem is never solved, but the government is never the source of the problem. The problems of the people are all caused by others, and the solution is always to grant government more power and control.

tdarrington on December 28, 2013 at 4:04 PM

Eloquently stated td

Rio Linda Refugee on December 28, 2013 at 5:15 PM

fundamentally Transforming. Only three more years left to “get er done”.

Jackson on December 28, 2013 at 5:20 PM

I find it interesting that in Memphis a d Shelby county TN there are only 3 places that sell gasoline without ethanol added, and they can not sell to consumers. They are strictly middlemen. You see there is a local law requiring gas stations to sell fuel with at least 15% ethanol for cars that burn gasoline. It is just their way to conquer global warming and pay off corn farmers.

simkeith on December 28, 2013 at 6:13 PM

If my memory is correct obama shut down a lot of coal generating stations and who do you think is going to make up the electric power? Storing electric power has not been invented yet and it needs to be generated as needed.

mixplix on December 28, 2013 at 8:00 PM

Every time it go to Oklahoma I top off with real gas. I cannot find 100% gas in Texas.

txhsmom on December 28, 2013 at 3:23 PM

Badge of honor here in OK. Ethanol-free.

msupertas on December 28, 2013 at 8:34 PM

“Democracy” movements are a favorite of Socialists. They make people think they are making a democratic decision to solve a problem, be it bad energy companies or bad insurance companies, etc. The result is to concentrate wealth and power in the hands of the political class. The beauty is, the people are never better off, the problem is never solved, but the government is never the source of the problem. The problems of the people are all caused by others, and the solution is always to grant government more power and control.

tdarrington on December 28, 2013 at 4:04 PM

Eloquently stated td

Rio Linda Refugee on December 28, 2013 at 5:15 PM

…ditto!

KOOLAID2 on December 28, 2013 at 9:55 PM

Regulation and renewable fuels are hurting, but there’s also that all the low-hanging fruit has been picked when it comes to energy. The boom is coming from much more technically challenging and much more expensive means of extracting oil and gas from the ground. So even in a perfect market, prices would still be going up.

Hal_10000 on December 28, 2013 at 10:08 PM

Electricity is overwhelmingly supplied by utility companies. They are the only “businesses” that encourage their customers to use LESS of their product. It’s a stupid arrangement.

doufree on December 29, 2013 at 7:26 AM