The University of Michigan’s new Energy Survey finds that Americans are worried about household energy becoming unaffordable. Nevertheless, compared to what consumers pay today, the costs of electricity, home heating fuels and gasoline would have to drastically soar before those fears came true.
The survey found that, on average, consumers said their home energy bills would have to climb by more than than 150 percent (i.e., a factor of 2.5) before the monthly bill would become unaffordable. But when it comes to motor fuel, consumers said they would be much more sensitive to price hikes at the pump. An increase of 85 percent from the average price of $3.42 per gallon at the time of the survey to $5.90 per gallon would be enough to push gas prices out of the reach of most households, the survey found.
The first UM Energy Survey, conducted during October 2013, sampled 502 households across the country with a margin of error of 5 percentage points. It found that 55 percent of consumers said they worry a great deal or fair amount about energy prices. Those polled who were in the bottom third of household incomes felt their home energy bill would have to double to become too much to bear. Conversely, households with incomes in the top third wouldn’t feel the pinch until prices increased by 3.5 times their October 2013 levels. Consumers in the middle third of household income said prices would have to rise by more than 2.5 times before energy would be unaffordable for them.
The perception of how big the home energy bill would have to get didn’t change across regions of the country, the survey found. The types of energy included electricity, natural gas, propane, heating oil, or other fuels homeowners and renters might use at home to power their lights, appliances, heating and air conditioning, household chores, electronics and entertainment.
When the poll results were broken down by property values, both renters and homeowners in the top third of home values shared the same opinion about when energy bills would become too expensive, with both saying that their bills would have to more than triple before the cost became too much. Homeowners in the bottom third of property values reported that energy costs would need to double to become unaffordable for them, while those in the middle third of property values said that prices would need to rise to just short of triple their current levels before household energy became too expensive.
When it came to gasoline prices, consumers said they were much more sensitive to price increases, with the majority of consumers finding a price of more than $5 per gallon would make gas unaffordable to them. At the time of the survey, the average retail price of $3.42 per gallon means that an 85 percent increase would push gas beyond what most U.S. households consider affordable, which is half the average increase they could tolerate in household energy costs. Consumers in the middle and bottom third of household incomes said gas would be unaffordable to them at about $5.60 per gallon and $5.40 per gallon, respectively, while consumers in the top third of household incomes said prices would have to climb to $6.50 per gallon before they couldn’t afford to fill up.