Kitchen Table Economics

Paying for Power

American energy prices are two or three times less than many of our wealthy trading partners, saving every American household thousands of dollars each year. Why are government policies threatening to change this?

We’re lucky to be Americans. Our economy and our natural resource wealth together give us some of the lowest energy costs in the developed world.

Low cost energy means we all pay thousands of dollars less each year to light and heat our homes as well as drive our cars. It also cuts the cost of making goods in our factories, and that creates high wage jobs right here at home. Along with low-cost access to fresh water, sanitation and food, cheap energy is crucial to a much higher standard of living for every single American.

At the current price of gasoline, Americans pay nearly $2,000 to keep each car filled up every year. Many of us have more than one car per household. British, French and German drivers pay more than twice as much for their gasoline. If Americans paid those prices, every home with two cars would shell out an extra $4,000 per year.

We also have some of the lowest electricity costs. It takes a little more than $1,400 per year to keep the lights on in a typical American home. At Germany’s electricity rates, we’d pay more than $4,200 per home.

Likewise, British industry pays twice what Americans do for natural gas. The French, Germans and Koreans pay three times as much.

Coal is among the cheapest ways to create electricity and the largest source of our electricity. There is no nation on Earth with more coal than the United States. We have nearly 28 percent of the world’s coal – more than China, India and Western Europe put together.

Americans and Canadians are now two of the world’s most aggressive and efficient producers of oil and natural gas, largely due to new technologies like hydraulic fracturing. The International Energy Agency predicts that by 2017, the United States will overtake both Saudi Arabia and Russia as the largest oil-producing nation on Earth.

By the end of this decade, world energy experts expect that we will be virtually self-sufficient, needing to import energy from no other nation except – in some instances – Canada.

In addition to being a major fuel for industrial production, natural gas is the second most important fuel (behind coal) for producing electricity. It is also used for home heating and – due to its increasing abundance – will soon become a major source of motor fuel for large trucks.

We’re also polluting less. Total carbon emissions from the United States were less in 2011 than in 1996. This trend will only improve as we use more natural gas, which has lower carbon output. And with a growing population and growing economy, this means far less carbon has been producing far more wealth.

Americans earn more from their energy and pay much less for it because of these huge advantages. Government policies that threaten the ways we get and use coal, oil and natural gas literally take money from all of us.