The Energy Information Administration (NYSEMKT:EIA) reported Thursday that US households spent an average of 2.7% of their income last year on household energy including home use of electricity, natural gas, fuel oil, propane, kerosene, wood, and coal, but excluding transportation fuels and spending on other household utilities like water and telephone service.
That was the lowest percent of household income spent on household energy since 2002, and one of the lowest percentages over the 40-year history reported by the EIA (see chart above). The share of household income spent on household energy wasn’t always this low.
Thirty years ago in the early 1980s, household spending on energy was at or above 4% of household income for most years between 1980 and 1985, and the average share of household income spent on energy over the last 40 years is 3.23%.
From the EIA:
“Aggregate home energy expenditures by U.S. households fell $12 billion in 2012 from the 2011 level. In 2012, prices for residential natural gas decreased 3% from the previous year, while household electricity prices stayed about the same. Warmer weather contributed to lower energy consumption in 2012, and because household energy expenditures reflect both prices and consumption, these changes resulted in lower household energy expenditures.”
The steady decline in the share of household income spending on home energy from 3.2% in 2008 to a ten-year low of 2.66% last year is largely because of the shale gas revolution, which lowered average annual gas prices by 67% over the last four years, from $8.00 per million BTUs in 2008 (with a peak above $12) to $2.66 in 2012. Natural gas prices are now on the rise again, so household energy bills may be higher this year than last, but still much lower than what gas prices and home energy bills would be without the shale revolution. US households and businesses have reaped billions of dollars in savings over the last four years from lower gas prices, because of the oceans of natural gas trapped in shale rock that have only recently been unlocked with breakthrough, revolutionary drilling technologies.