Electricity prices in America dropped by a third over the last year due to cheap natural gas provided by hydraulic fracturing, or fracking, according to a Monday report by the Energy Information Administration (EIA).
The EIA report states the cost of electricity dropped by up to 37 percent in 2015 relative to 2014. This huge drop occurred despite attempts by the Environmental Protection Agency (EPA) to create costly new regulations.
Source: Energy Information Administration
This large drop in the cost of electricity is due to natural gas prices being at their lowest point since 1999 due to fracking. Natural gas has been out-competing coal for years since fracking for shale gas unexpectedly created an incredible amount of new natural gas production, making the resource very cheap.
Studies by academics and think tanks generally conclude EPA regulations like the Clean Power Plan likely increase unemployment, slow economic growth, and create regulatory incentives which make the problem worse. Additionally, EPA regulations cause increased prices and reduced productivity which harm low-income individuals far more than they hamper the wealthy. The Clean Power Plan is expected to cost a staggering $41 billion annually, according to analysis by NERA Economic Consulting.
The poor and ethnic minorities tend to spend a higher proportion of their incomes on “basic needs” like groceries, power bills, clothing, housing and gasoline. As essential goods like electricity become more expensive, the cost of producing goods and services that use electricity increases, effectively raising the price of almost everything. The higher prices are ultimately paid for by consumers, not industries.
Increases in the price of electricity harm African-Americans and other ethnic minorities far more than they harm the average household, according to a study by the Pacific Research Institute. The Clean Power Plan is expected to cause the average annual electricity bill to rise from 2.9 percent to 3.8 percent of annual income for the average household. For the average African-American household, annual spending on electricity will rise from 4.5 percent to 5.8 percent of household income. Lower-income African-Americans will bear an even larger burden and could spend up to 26 percent of their household income on electricity.
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