Americans’ concern about effect of energy use on environment reaches five-year, record high

As the saying goes, the more things change, the more things stay the same.

Both are certainly the case when it comes to the University of Michigan Energy Survey’s latest data from summer 2018. We found last November that while consumers were less concerned about energy affordability, they were increasingly concerned about the impact that energy use has on the environment. That concern is now at a five-year record high.

Energy-related concerns

These latest results continue the trend of the growing degree to which Americans worry about how energy use affects environmental conditions including air quality, water quality, global warming and personal health. As shown in the adjoining chart, the level of environmental concern has reached a five-year high. It also reveals a notable contrast between consumer environmental concerns about energy relative to their concerns about whether energy is reliable and affordable.

Nationally representative, the U-M Energy Survey has tracked U.S. consumers’ attitudes about energy impacts and related affordability, reliability, and environmental concerns since the fall of 2013. Survey questions are administered each quarter, tacked onto the end of the Surveys of Consumers, or “SCA”, as a rider. The SCA is renowned for its consumer sentiment index. (See our Methodology page for details and links to the exact question wording.)

Trends in consumer concerns about energy use and environmental impact, affordability and reliability

Source: University of Michigan Energy Survey data through the most recent quarter (Summer 2018)

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A rising belief that energy use affects global warming

This report highlights some notable trends in consumer views about the link between energy use and the environment as observed over the 17 quarterly survey samples analyzed to date, from Fall 2013 through Fall 2017. Not only do a rising number of Americans say that energy use affects the environment “a lot,” but a significantly growing portion of the population believes that global warming is the aspect of the environment most affected by energy use. That’s a view now held by 36% of U.S. consumers, compared to 25% when the survey started in Fall 2013.

Workers rescuing residents of Fayetteville, NC, homes flooded by Hurricane Matthew in October, 2016.

Rescue workers evacuating residents of homes in Fayetteville, NC, during floods caused by Hurricane Matthew, October 2016. Credit: U.S. Army National Guard

Other highlights from the report include:

  • Americans are more concerned about the effect of energy on the environment than they are about the affordability of energy, and much more concerned about the environmental and cost impacts of energy than about its reliability.
  • The belief that global warming is the environmental concern most affected by energy use has risen twice as fast among women as it has among men.
  • The South in particular has seen a large jump in the belief that global warming is the aspect of the environment most impacted by energy use, with the number of Southerners holding that view rising from 20% of in Fall 2013 to 34% as of last year.

Moreover, both the degree of belief that energy use affects the environment and levels of concern about the issue are fairly uniform across income brackets, in contrast to the differences in perspective seen by gender and by region.

For further details, download the report: A Rising Belief that Everyday Energy Use Affects Global Warming.

Environmental worry rises as concerns about energy costs fall

Over the past year, the degree of concern that American consumers express about the effect of energy on the environment has increased even as their concern about what they have to pay for energy has decreased. That’s the clear picture that emerges in the latest data from the University of Michigan Energy Survey, which has tracked U.S. consumers’ concerns about the affordability, reliability and environmental impact of energy over the past four years. As seen in this chart, 65 percent of survey respondents say that they personally worry at least a fair amount about how energy use affects the environment. That’s roughly 20 percentage points higher than the number who express that degree of concern about the affordability of energy. (See our questionnaire for the exact questions asked and their sequence in the survey.) As it has since the start of the U-M Energy Survey, concern about energy reliability is much lower, with an average of 30 percent of respondents expressing at least a fair amount of concern about whether they will reliably have electricity, heat or fuel.

Concern about the environment edged out concern about affordability even from the start of the U-M Energy Survey in fall 2013. Gasoline prices were much higher then, but environmental worries became statistically greater than concern about energy affordability even before oil prices fell in late 2014. Since then the gap between environmental concern and concern about energy costs has widened, particularly over the past year and a half (the most recent six quarterly surveys, from April 2016 through July 2017). Our next survey, taken over the month of October, is just wrapping up, but once we analyze the new data, we expect the gap between environmental and cost concerns to remain wide.

A closer look at consumer feelings about energy costs can be seen in the affordability index values, which we track separately for gasoline prices and home energy bills. The next chart shows these indices over the past four years; here, a higher index means that consumers fine energy to be more affordable, which generally correlates with a lesser degree of concern about energy costs. An affordability index of 100 means that an energy cost would have to go up by 100 percent relative to what it was when the survey was taken. Comparing this chart to the first one, it’s clear that the gap between consumers’ degrees of concern about the environment and about energy affordability widened when gasoline prices fell in late 2014, making motor fuel more affordable than it had been over the year before. As detailed in our latest article on gasoline affordability, consumers views on this score have been statistically stable over the past year. Since last summer, the index has hovered around the 100 level, meaning that pump prices would have to double before the average consumer would be motivated to change how they travel. As for home energy bills, consumers have recently found them to be significantly more affordable over the past two quarters.

We also examined how energy-related concerns vary according to a consumer’s household income. One might expect that the extent to which individuals worry about a given energy-related issue would fall as incomes rise. As seen in the next chart, that is certainly the case for concerns about the affordability and reliability of energy. (The error bars represent 95% confidence intervals.) These results are shown on a scale of 0-100, where zero represents the responses of consumers who say that they are not all concerned about an issue and 100 represents those who express a great deal of concern. As for the affordability of energy, consumers in the lower third of the distribution by self-reported household income have a concern level of 58. This metric drops to 47 for middle-income consumers and 41 for upper-income consumers, both below the neutral level of 50 that would reflect consumers being neither very concerned nor unconcerned.  Concern about the reliability of energy is lower overall, but shows a similarly clear drop off as household income rises.

Regarding the impact of energy use on the environment, lower income consumers express a somewhat greater degree of concern than others. However, on this issue the trend across income categories is much less pronounced. We see no statistically significant difference between the views of middle and upper income consumers, and the average level of concern is 62 across all income brackets. This finding refutes a view, pushed over the years by anti-regulatory pundits, that the environment is mainly a concern of the “elites,” and that lower and middle-income Americans concerned about costs don’t have the luxury of worrying about the environment. Our data show that lower-income Americans are in fact more concerned than average. In short, Americans express a relatively high level of the concern about how energy affects the environment regardless of their income.

Carbon taxes and the affordability of gasoline

One of the options on the table as policymakers grapple with climate disruption is a carbon tax. Many economists favor such an approach, which would motivate businesses and consumers to make choices that progressively lower the net emissions of carbon dioxide (CO2) and other greenhouse gases that cause global warming. But how would Americans feel about a policy that, among other effects, will raise the price of gasoline?

The U-M Energy Survey routinely asks consumers how much they feel they can afford to pay before their costs, for both home energy and gasoline, become so high that they would have to make changes in their daily lives. The resulting answers about consumers’ thresholds for “pain at the pump” enable us to assess how a carbon tax would affect American consumers’ feelings about the affordability of gasoline.

This report describes the findings, focusing on the carbon tax level of $40 per ton of CO2 that has been proposed by the Climate Leadership Council. The analysis also examines the effect of lower and higher carbon taxes, of $10 and $100 per ton, respectively, as well as how such taxes would affect different groups of consumers by income.

It turns out that with a $40 per ton carbon tax — which translates to an added 36¢ per gallon at the pump, gasoline would still be considered affordable by over 90% of Americans. That finding is based on survey responses relative to an average base gasoline price of $2.80 per gallon, which such a carbon tax would bump up to $3.16 per gallon.

Over the nearly four years of U-M Energy Survey data analyzed to date, the gasoline price that consumers say they would find unaffordable has generally been more than $5 per gallon. So that leaves a good bit of leeway between recent prices and the price levels likely to result from low to moderate levels of a carbon tax.

Looking more closely at the data, however, reveals how views on fuel affordability vary by household income. A $40 per ton carbon tax would push 14% of low-income consumers into the zone where they feel that they would need to make changes in how they travel. However, such a tax would just put 7% of middle-income and only 4% of high-income consumers into a situation where, according to their survey responses, they would feel that gasoline becomes costly enough for them to change how they get around.

For further details, download our full report on Carbon Taxes and the Affordability of Gasoline

 

A carbon tax would not cause too much grief at the gas pump

ANN ARBOR — A new report from the University of Michigan Energy Survey offers insight into how American consumers would react to a carbon tax. A tax of $40 per ton of carbon — which adds 36¢ per gallon to the price of gasoline — still leaves more than 90% of U.S. consumers inside their comfort zones for fuel prices and travel choices. But the report, based on asking consumers how much they feel they can afford to pay for fuel, also finds that much greater pressure would be felt by consumers in the lower third of the distribution by household income.

Launched in fall 2013 when fuel prices were much higher than they are now, the U-M Energy Survey polls a nationally representative sample of Americans about their views on the affordability, reliability and environmental impact of energy. These energy-related questions are appended four times a year to the University of Michigan Surveys of Consumers, the in-depth telephone interviews that are the source of the well-known Index of Consumer Sentiment.

Interviewers ask consumers how much the price of gasoline would have to rise before it would cause them to change how they get around. Researchers compare those responses to actual gasoline prices and to consumers’ self-reported incomes as also tallied by the surveys.

“On average, consumers said that gasoline would have to be over $5.00 per gallon before they would consider it unaffordable,” says John DeCicco, the survey director and a research professor at the University of Michigan Energy Institute. “So there is a good bit of leeway for a carbon tax to be added before most Americans would experience serious pain at the pump.”

Earlier this year, a group of Republican elders and business leaders formed the Climate Leadership Council to advance a carbon tax, which would place a levy on energy sources in proportion to how much carbon dioxide (CO2) they emit, as a conservative solution to global warming. Their proposal calls for taxing carbon at $40 per ton while rebating revenues back to consumers through dividends and reducing the regulations imposed on business.

Relative to a base level of $2.80 per gallon, that would push the pump price up to $3.16 per gallon. The number of Americans who would then find fuel to be unaffordable would rise from 2% to 7.5%, still keeping over 90% of consumers below their thresholds for pain at the pump.

“However, these average findings mask significant differences in consumer views,” DeCicco points out. “We found a wide range of answers to our question about the price of gasoline.”

The new report takes a close look at the responses of consumers from across the spectrum. Some consumers already feel that gasoline is unaffordable at $2.80 per gallon, the average price over the nearly four years since the survey was launched. On the other hand, every survey sample found some consumers who replied that gasoline would have to exceed $10, $20 and even in some cases over $50 per gallon before it would prod them to make significant changes in how they get around.

Because consumers’ views of affordability depend on their income, the U-M analysis grouped survey respondents into thirds (terciles) — low, middle and high — according to self-reported income.

“A carbon tax of $40 per ton would push 14% of low-income consumers to where they feel they would have to significantly change their travel choices,” DeCicco noted. “In contrast, 7% of middle-income and only 4% of high-income consumers would find themselves in that situation.”

The study also examined lower and higher taxes of $10 and $100 per ton of carbon, implying 9¢ and 89¢ more per gallon, respectively. The $10 tax would have little effect. But at $100 per ton — a level that some economists say is needed to deeply cut carbon — 21% of low-income consumers would feel that gasoline is unaffordable.

Many carbon tax proposals, including the one from the Climate Leadership Council, include dividends for consumers. But policymakers can find many ways to use new tax revenues. The survey findings highlight how targeting rebates for low-income households would help the Americans who most feel that higher pump prices will impact their daily lives.

Regarding the unique approach taken by the U-M Energy Survey, “We assess each individual’s personal feelings about the price of fuel based on their own needs and experience,” DeCicco explains. “Moreover, we do so independently of the reason for a price change, so that we avoid pushing  people’s buttons, so to speak, by framing the survey in terms of taxes, climate action or other potentially volatile policy issues.”

For more on these findings, see https://www.umenergysurvey.com/carbon-tax-how-much-too-much/ and download the full report, “Carbon Taxes and the Affordability of Gasoline,” at http://www.umenergysurvey.com/assets/C-taxG-aff_12Sep2017.pdf

The Energy Survey is a quarterly rider on the University of Michigan Surveys of Consumers, which can be accessed at http://www.sca.isr.umich.edu/. For more information about the participating research units, visit the websites for the Energy Institute at http://energy.umich.edu/ and for the Institute for Social Research at http://home.isr.umich.edu/.

Contact:

Amy Mast, Energy Institute communications director, at amymast@umich.edu, 734-615-5678

John M. DeCicco, Ph.D., U-M Energy Survey director, at DeCicco@umich.edu, 734-764-6757

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Download this press release in PDF format here

A carbon tax: how much would be too much?

Even in a debate as heated as the one over global warming, recent proposals by some Republican elders offer hope that cooler heads might one day prevail. They propose a conservative way to address climate risk: harnessing market forces with a carbon tax while refunding dividends to consumers. If such an approach is in the cards, what would it mean for consumers, particularly for buying gasoline without too much pain at the pump?

The University of Michigan Energy Survey asks consumers how much they can afford to pay for energy before the cost becomes so high that they would have to significantly change their lifestyle. The responses are the basis for the affordability indices we publish seasonally, one for home energy and the other for gasoline. Although we don’t ask explicitly about a carbon tax, our data equip us to estimate how many consumers would be pushed outside their comfort zones by a tax of a given magnitude.

Photos of James A. Baker III, Bill McKibben, George P. Shultz and Laurene Powell Jobs

Supporters of a carbon tax include (clockwise from upper right): Bill McKibben, George Shultz, Laurene Powell Jobs and James Baker.

The Climate Leadership Council — whose headliners include former GOP cabinet members James A. Baker III, George P. Shultz and Henry M. Paulson, Jr. — has floated a proposal to tax carbon dioxide (CO2) at $40 per ton. A carbon tax of that level translates to an added 36¢ per gallon at the pump.

Motor fuel is less expensive now than it was three years ago; the national average spanning the period of higher prices through the most recent data is $2.80 per gallon. A $40 per ton carbon tax would bump the price to $3.16 per gallon. Based on our survey responses, that price would still be considered affordable by more than 90% of Americans. It is well below the $5.00 per gallon level typical of the average response to our survey question, which asks:

At what price per gallon would gasoline get so high that it becomes unaffordable to you (and your family)? 

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What source of energy do Americans think affects the environment the most?

One of the questions we ask during the Energy Survey is about what source of energy Americans think affects the environment the most. This question is the third in a sequence that probes views on the environmental dimensions of energy (see our questionnaire here).

We first ask each respondent how much he or she believes that energy affects the environment. Based on the latest data, 77 percent of Americans say that they think energy affects the environment at least at fair amount, in contrast to 20 percent who say it affects the environment only a little and 3 percent who don’t believe energy use affects the environment at all.

We next ask about the aspect of the environment that they think is most affected by energy use. Based on their answer to that question, we then ask the respondents what source of energy they think is most responsible. This question is posed in a completely open-ended fashion; the university’s professional telephone interviewers do not recite a list of energy sources from which to choose or otherwise prompt a respondent for an answer. The results are shown in the following chart, which tracks consumer responses over the first three years of the U-M Energy Survey. The most frequent answer is some form of petroleum, reflecting responses of petroleum, oil or a petroleum product such as gasoline. Although the number of respondents who fingered petroleum varied over the three years of quarterly samples shown, no clear trend is apparent. On average, 36 percent of consumers said that some form of petroleum was the source of energy that affected the environment the most.

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Concerns about energy’s impact on the environment continue to edge out concerns about affordability

With three years and counting of data, a clear trend has emerged: consumers are more concerned about how energy impacts the environment than they about whether it is sufficiently affordable and reliable. The extent to which consumers worry about reliability — that is, whether their lights stay on and the fuels they need are readily available — has consistently lagged their concerns about energy costs and environmental impacts.

Over the first four quarterly samples starting with the launch of the U-M Energy Survey in October 2013, the difference between the levels of concern about the environment and about affordability was not statistically significant, even though the average for the environment was nominally higher than that for affordability. However, the significance of the gap grew as additional data came in. By the second year, we were able to report that the environment had pulled ahead of affordability as Americans’ top energy-related concern. As seen in the chart below, based on data over the first three years of the survey, concern about affordability has lessened a bit in 2016 while concern about the environment has remained strong in spite of some transient ups and downs.   

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Environment pulls ahead of affordability as Americans’ top energy-related concern

In our very first survey, taken in October 2013, we were surprised to find that consumers were at least as worried about the impact of energy on the environment as they were about its affordability. The number of respondents who said that they were concerned either “a great deal” or “a fair amount” about the environmental impact of energy was 60 (±5) percent. At the same time, the number who expressed the same levels of concern about the affordability of energy was 55 (±5) percent.

Although ecology edged out the wallet numerically, the difference was not statistically significant in our initial sample of 500 U.S. households. For that reason, we reported an essentially equal level of consumer anxiety about these two energy-related concerns, a finding that was noteworthy in and of itself.

As time went on and each new quarterly U-M Energy Survey was taken, the environmental concern retained its edge. And now, with five quarterly samples and a total of 2,500 consumer interviews, concern about the environment clearly beats concern about affordability, 60 (±2) percent to 55 (±2) percent.Continue Reading