In the midst of an energy boom, electricity prices spike

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.


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.