On the way to work this morning the radio announced that by 1:00 p.m. this afternoon the temperature in Houston would reach 97 degrees. The Heat Index, however, would make it feel like 110 (neither a record by the way). As an economist, my thought went straight to what the air conditioning was going to do to my electricity bill. Energy costs for the home and transportation consume anywhere from 5 to 22 percent of a families’ total after-tax income. The total cost or energy is not just a function of the kilowatt hour cost of electricity or the per-gallon charge for gasoline, but both the per unit cost and the amount of energy consumed. Included in these are state-specific taxes that vary significantly across the country.
As usual, I invoke the TINSTAANREM axiom — There Is No Such Thing As A National Real Estate Market, nor is there such a thing as a common cost or total usage of energy. Houston, which has highly competitive electricity rates, also requires air conditioning costs often starting in April and can run through October. My friends in Fairbanks, Alaska, however, heat their homes mostly using heating oil which some years gets switched on as early as September and can run into May. While Houston gasoline costs are cheap (particularly compared to California), many people drive great distances daily given the massive expanse of the fourth largest Metropolitan Statistical Area in the country. The presence or lack of public transportation can materially alter motor fuel costs.
WalletHub once again addresses which states are the most (and least) affordable for total energy costs – considering both the per unit cost and quantity consumed. WalletHub looked at the following average monthly total costs for the following fuel sources:
- Natural Gas
- Motor Fuel (gasoline and diesel)
Globally, total-electric plugin autos have seen just 5 million total sales cumulative through 2018. In the U.S. there were just 3.4 all-electric vehicles per 1,000 people in 2018. There were 208,000 new all-electric vehicle registrations in the U.S, in 2018, but with17.3 million total sales of SUVs, cars and trucks last year, the impact of electric cars on total energy consumption is miniscule – literally almost imperceptible.
- Home Heating Oil
The following table shows the most expensive states for total monthly energy costs per family. In some, note that the monthly expense is either minimal or zero for a specific energy source. In Maine, for example, the average monthly natural gas cost is $6. That does not mean that natural gas is comparatively cheap, but rather very few homes have natural gas available. The same is true for home heating oil in Wyoming. Few homes in Wyoming use oil as a heating source. Compared to two years ago, departing the top-10 list were Rhode Island, Mississippi and Vermont. Entering the top-10 most expensive energy list in 2019 were Alabama, Indiana and Oklahoma.
The next table shows the 10 least–energy cost states. New to this low-cost group compared to two years ago are Arkansas, Hawaii, Louisiana, New York and Tennessee. States that are no longer included in the 10-least cost group include Arizona, California, New Mexico, Nebraska and Oregon.
While total monthly energy costs on average vary from a low of $204 in the District of Columbia ($15 less than 2017) to a high of $373 ($7 less than 2017) in Connecticut, individual component energy costs vary far greater. The following tables show the variability of cost or consumption of the individual energy components, again ranked from most to least.
The following table shows the 10 most and least expensive states monthly for electricity.
The following table shows the 10 most and least expensive states monthly for motor fuels. These costs vary as function of distance driven and the respective cost of fuel. In California, for example, gasoline currently averages $3.766 per gallon compared to $2.348 in Mississippi. Taxes explain some, but not all of the differences. California taxes gasoline at 55.22 cents per gallon while Mississippi’s tax is 18.79 cents according to the Tax Foundation.
The following table shows average energy costs from each source by state.
To read the entire WalletHub report and see the rankings of all 50 states plus the District of Columbia click https://wallethub.com/edu/energy-costs-by-state/4833/
To compare gasoline costs per state click
AAA at http://gasprices.aaa.com/
State-by-state gasoline taxes from the Tax Foundation can be found at https://taxfoundation.org/state-gas-tax-rates-july-2018/
To compare electricity cost per state click
For natural gas cost per state click
The total cost of energy varies due to a myriad of reasons: cost, size and energy efficiency of the home, temperatures, distance driven, fuel efficiency of vehicles — even taxes. Hawaii is a good example of the complexities of residential energy costs. With an average home size of approximately 1,300 square feet (one-half that of the U.S.), there is less home to light-heat-cool. Electricity costs, however, are the greatest in the U.S. on a kilowatt-hour at 34.45 cents – almost three times the 13.26 cents average cost across the country. While there are no great distances to drive in Hawaii, the overall cost of Motor Fuel ranks 29th most in the country at $133 per month compared to Texas (ranked 28th with a monthly average $134).
Still, energy, for many families, is a major expenditure of the family budget and the more that cost is the less there is to spend on everything else – including housing. We are fortunate today to once again have cheap energy in the U.S.