In last year, electric fell 2.4%, gas fell 12.7%, while overall CPI rose 1.4%
On Friday, the Consumer Price Index for January was announced. The ultimate measure of consumer prices was unchanged from December, for all consumer goods and services.
But for electric service, specifically, the index fell seven tenths of a percent. For natural gas service, specifically, the index fell six tenths of a percent. This means electricity and natural gas became cheaper, relatively.
Better to look at these indices over a year rather than a month. For all goods and services, the index rose around one and a half percent. For electric service, specifically, the index fell around two and a half percent. For natural gas service, specifically, the index fell dramatically, by around twelve and a half percent.
So over the last year, electricity has become much cheaper, relatively. And natural gas has become very much cheaper.
Indeed, the prices of electricity and natural gas are heading in quite the opposite direction from major components of the CPI. Such as medical care services, where prices rose around three and a half percent. And shelter, where prices rose around three percent.
The CPI quantifies how much prices have risen since the base period, which are the years 1982 through 1984. Since the base period, thirty two to thirty four years ago, electric service prices have doubled, approximately. Natural gas service prices have gone up too but not doubled.
The CPI, for all goods and services, has risen well above doubling. A telling statistic is that electric service prices have increased only eighty-nine percent as much as the CPI. Natural gas service prices have increased only seventy-seven percent as much as the CPI.
Electricity is less than three percent of the CPI and natural gas less than one percent. Thus falling prices for electric and gas service don’t drastically improve the economic well-being of many people.
Gasoline prices have been falling too, and gasoline is three percent of the CPI. Every little bit helps, but offsetting rising prices for apartment rent, houses, vehicle insurance, hospitals, tuition, etc. wipe out the benefits to consumers of energy price drops.
The March issue of Public Utilities Fortnightly will be in your hands in a couple of weeks. Hope you agree it’s our best issue in decades.
Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: email@example.com