The U-M Energy Survey’s first year report

One year on and with four quarterly samples now analyzed, the University of Michigan Energy Survey is providing policymakers and the public with new insights into how U.S. consumers feel about energy as they experience it in their everyday lives. By adopting an approach grounded in consumer psychology rather than microeconomics, this unique survey has already generated eye-opening results. us-map-full-cover-y1-report

Contrary to both popular belief and the findings of surveys that presume economic trade-offs when framing their questions, we find that  Americans are just as concerned about energy’s impact on the environment as they are about its affordability.

Environmental concern nominally edged out affordability in the very first quarterly sample, taken in October 2013, but the results were not yet statistically significant. Now, with four samples of roughly 500 households each behind us, the finding is quite robust.

Our data show that 59 percent of Americans say they worry “a great deal” or “a fair amount” about the environmental impact of energy, while 55 percent worry to the same degree about affordability. The margin of error on these results is ±2 percent. Far fewer respondents told us that they had similar levels of concern about the reliability of energy.

We also find that concern about energy’s impact on the environment varies regionally. Residents of the Northeast were the most concerned along these lines, with 68 percent of consumers saying they worry “a great deal” or “a fair amount” about the environmental impact of energy. The level of concern was lower in the South and West, where 56 percent of respondents worry a great deal or a fair amount. The Midwestern response was similar to the national average of 59 percent expressing those levels of concern.

Another key finding is that consumers express much greater sensitivity to higher gasoline prices than they do to higher home energy bills. On average, consumers view a 140 percent price increase as unaffordable for home energy bills. In contrast, they see a 66 percent price increase as unaffordable for gasoline.

When it comes to gasoline, however, there is no middle class: both middle- and lower-income consumers say that it would be unaffordable if it hit $5.60 per gallon. In contrast, upper-income consumers would not find gasoline unaffordable until it reached $6.60 per gallon. By way of comparison, the national average pump price was $3.57 per gallon over the one-year period covered by the survey to date.

Similar feelings were expressed about home energy. Consumers in the highest income tercile told us they could bear much greater cost increases than those that middle and lower-income consumers said they could handle without having to make changes in their daily lives. On average, lower- and middle-income consumers said that home energy would become unaffordable if their bills were to double, whereas for higher-income consumers, that threshold would not be reached until energy bills tripled.

Further details on these findings, as well as other results tallied based on our analysis of the first full year of U-M Energy Survey data, can be found in our first-year report, which can be accessed here or via the download button at the top of this post.