Investments in clean energy are the ideal response to high fossil fuel costs
Both at the pump and on their heating bills, consumers across the U.S. will be walloped by price increases this year.
The average American household will spend about $480 (or 31 percent) more on gasoline in 2021 than in 2020, according to the Energy Information Administration. And home heating bills are forecasted to be 30 percent higher this year for the almost half of U.S. households that rely on natural gas, with even worse pain expected for homes that still use propane or oil for heat.
The fossil fuel industry and its political allies have long argued that increasing U.S. production would lower energy prices. But it hasn’t worked out that way because fossil fuels remain global commodities prone to boom-bust cycles. The push to export American-produced fossil fuels has ensured this is the case, leaving us more vulnerable to bad actors like OPEC and Russian President Vladimir Putin that have routinely weaponized supply to manipulate global oil and natural gas pricing or otherwise suit their geopolitical whims.
The good news is we now have readily available solutions to reduce our fossil fuel consumption, lower energy prices and insulate against energy instability. Even better, efficiency and renewable energy are less costly than the fossil fuels they will replace.
This is just as true for our cars and trucks as it is for our homes and offices. In a very short time, small upfront investments in efficiency or electrification upgrades pay for themselves and yield significant reductions in the cost of driving or heating and cooling our buildings. In the last year alone, gasoline prices have increased from $2.26 to $3.28. At this high price, the cost to drive a gasoline-powered car is about three times as high as it is to drive an electric vehicle. And if you charge your EV at night (off-peak), the cost will be cut in half. A well-managed electric car costs one-sixth as much to operate, meaning the cost of buying an EV is recovered quickly.
Better building and appliance standards (e.g., refrigerators, air conditioners, lighting) are likewise designed to protect consumers from high energy bills. In many cases, significant gains in efficiency can be reaped for the cost of a single cup of coffee. For instance, swapping out just one light bulb from an incandescent to an LED reduces its energy usage by 75 percent, saving $40 to $90 over a decade, not to mention the benefit of rarely changing the bulb.
The primary benefit of electricity, however, comes from the growing renewable power sources to generate it. Wind and solar are now cheaper than coal and even gas, and energy analysts expect this cost advantage to continue to grow. Consequently, the United States could reliably deliver 90 percent clean electricity nationwide by 2035, and 80 percent by 2030, at no additional cost to consumers, according to multiple studies.
While this would give us lower out-of-pocket costs and less volatility, we would also get the benefits of less pollution, including better health and lower health care costs, as well as significantly reduce greenhouse gas emissions that drives devastating climate change.
The Build Back Better Act aims to reduce our consumption of fossil fuels with heavy investments and tax incentives to advance renewable energy, electric vehicles, as well as building efficiency and electrification. But even if Congress is able to pass this legislation in the coming weeks, fossil fuels are not going to drop out of our economy overnight. To protect American consumers from often expensive and always volatile gas and oil prices, it is critical that we continue to implement the strongest possible efficiency standards.
For example, the Environmental Protection Agency and National Highway Traffic Safety Administration should adopt the next generation of clean car efficiency standards with a requirement that automakers actually produce EVs. The Department of Energy should immediately implement minimum efficiency standards for everyday light bulbs (where every month of delay is costing American consumers nearly $300 million in lost utility savings).
The Biden administration will undoubtedly declare victory if it wins passage of the Build Back Better bill. However, steps like these are still needed to deliver savings to consumers and protect Americans from inevitable price spikes in fossil fuels.
Jack Gillis is executive director of the Consumer Federation of America (CFA), is an association of non-profit consumer organizations. He previously served as CFA’s director of public affairs since 1983 to 2018. Gillis also serves as an advocate on issues relating to auto safety, auto buying, fuel efficiency and consumer protection.
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