Tracking America's Energy Billby Trevor Houser | March 27, 2013
Energy costs are a key variable in US economic performance. Yet available data on how much Americans spend fueling their cars, heating their homes and lighting their offices either lags by a couple years or is incomplete. This month, we are introducing the RHG Energy Meter, a more timely and inclusive estimate of US energy expenditures. This report provides an overview of the indicator and discusses how America’s energy bill has changed over the past couple years.
Improving energy expenditure data: Monthly energy cost estimates are available from the Commerce and Labor Departments, but exclude business energy expenditures. The Energy Information Administration (EIA) publishes annual economy-wide energy cost data, but with a two-year lag. The RHG Energy Meter provides monthly estimates of energy expenditures by fuel in the residential, commercial, industrial and transportation sectors, including how much of that spending went to imports vs. domestic production.
America’s energy bill has started to fall: We estimate economy-wide energy costs fell by 4.9% in 2012 following an 11% increase in 2011. The $1.32 trillion US households and businesses spent on electricity, petroleum, natural gas, coal and renewables last year amounts to 8.4% of GDP, down from 9.1% in 2011 but still high by recent historical standards. Weaker demand accounted for just under half the decline, with the rest coming from lower energy prices. Delivered natural gas prices were down 19% in 2012, which helped lower industrial energy costs in particular. But petroleum and electricity prices were only off by 1.5% and 2.0% respectively. And as they account for more than 90% of delivered energy by value, the overall reduction in energy expenditures was relatively modest.
More of what Americans spend is staying at home: US crude oil and natural gas imports declined last year while refined product and coal exports rose. On net, Americans spent $284 billion on energy imports in 2012, down 13.6% from the year prior. Of that, $4 billion was for natural gas, down 51% from 2011 and less than one-fifth of what was spent in 2007. And the US ran an $18 billion trade surplus in refined petroleum products, a dramatic turn -around from the $54 billion trade deficit in 2008.
Not out of the woods yet: The US spent $313 billion on imported crude in 2012, the third highest year in American history (adjusted for inflation). Net crude imports declined by $22 billion in 2012, a welcome improvement after the $77 billion increase in 2011. And growth in domestic crude production prevented what would have otherwise been considerably higher oil prices. Total energy expenditures are unlikely to fall much if at all this year, but the share of energy spending that stays at home will continue to increase. Switching from imported to domestically produced energy only partially mitigates the energy-related risks to the US economic recovery, however. An oil price spike could still derail the train.