After reaching a peak in June 2022, inflation has gradually declined. This trend is being cheered by Americans who have felt the squeeze on their wallets for the past year. But the cost of one necessity remains stubbornly elevated and is unlikely to change anytime soon: electricity.
The cost of residential energy rose 10% in 2022 and the US Energy Information Administration predicts prices will ratchet up another 3.5% through 2024.
Why So High?
The interconnectedness of the world economy is reflected in the cost of commodities like electricity. When Russia invaded Ukraine, the European Union reduced its imports of natural gas from Russia. As a result, the demand for US natural gas skyrocketed. Since 40% of US electricity is generated by natural gas, this supply disruption triggered price increases for the fuel.
Also, utility providers have seen their production costs rise due to higher labor and supply prices. In turn, these costs are being passed on to consumers.
Together, the supply disruption and inflationary pressures are keeping electricity prices elevated.
While consumers can’t control world supply and demand dynamics, there are things you can do to limit energy usage and save money. Here are some budget-friendly tips.
• Use a smart thermostat. These devices allow you to control your home temperature remotely via phone and schedule when heat or air conditioners turn on or off.
• Seal air leaks. Inadequate weatherstripping can cause the thermostat to turn on frequently.
• Invest in efficient systems. Many appliances have energy-saving options. Buying one could save you on overall costs — and potentially even score you a tax credit.
• Opt for time-of-use billing. Your utility provider may offer reduced rates if you use energy during off-peak times, such as midday or late at night.
While some of these options require an upfront cost, in time, they can pay for themselves — and, in the long run, zap your electricity bill down to size.
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