Another cold winter, another increase in heating costs: The U.S. is seeing a dramatic rise in prices for natural gas, while the Midwest and Southeast scramble to increase their supply of propane.
Haven’t we seen this before?
Not for a while. In recent years, milder winters, coupled with a natural gas boom, have resulted in lower energy costs for most Americans. And, as our 2013 Energy Pulse survey revealed, energy conservation habits at home have slipped as a result. Between 2011 and 2013, our study found that the percentage of people reporting simple energy-saving habits, such as washing in cold water or adjusting thermostats, has fallen from nearly 80% to 56%. Similarly, the percentage of those who unplug chargers or small appliances has also fallen about 15 percentage points over those same two years.
Our theory is that Americans have been lulled into a false sense of complacency and have become less vigilant because heating costs, in particular, have not been the painful reminder lately that they have been historically. Unfortunately, the weather and market forces have brought back some of the pain.
Utilities, harried by environmental groups and encouraged by lower prices and new and impending EPA regulations, have been transitioning away from coal-fired generation – retooling power plants for natural gas. But as demand increases to outpace production, prices rise. Since energy markets are global, economic forces in other countries add pressure to pricing as well. Add a cold snap, and you have a price spike.
A similar scenario is playing out in the rural heartland, where many homes rely on propane for heating. They’re feeling the pinch due to low propane supplies caused by farmers who’ve had to dry/heat crops during unseasonably wet and cold weather. Cold weather has also affected propane distribution, with main pipelines freezing and further adding to supply pressures. Result: a dramatic price increase and limited supply, just when it is needed most.
At Shelton, we often say one of the best things to spur behavior change is a good price hike. The last few weeks are a reminder of how economic forces and weather continue to affect the cost of the energy we use, and that there is a need to re-engage consumers and reduce energy consumption.
The price is right to encourage energy efficiency improvements and energy conservation behaviors. People are in the right frame of mind to finally prioritize the energy efficiency activities they’ve been putting off, likely feeling a sense of urgency they haven’t felt for years. Utilities and energy efficient product manufacturers should “strike while the price is hot” to promote energy efficiency products and programs now – before supply adjusts and the weather relents.