Impacts from High Energy Prices
Economy
A recent survey by the National Association for Business Economics found that high energy prices are one of the biggest short-term problems facing the U.S. economy.
Consumers
According to a November 2007 Report from the Consumer Federation of America, over the past five years, household energy expenditures (home heating and gasoline) have nearly doubled, and are now 50 percent more than health care expenditures and 23 percent more than spending on food.
Federal energy assistance, such as the Low Income Home Energy Assistance Program (LIHEAP), is vital to fixed-income groups, including retirees. However, LIHEAP reported that its grants are now covering only 35 percent of recipients’ costs this winter because of higher energy prices.
Renewable Fuels
High costs for feedstocks, such as soybean oil, are making it extremely difficult to produce biodiesel economically, according to a presentation by the National Biodiesel Board. Higher energy costs for fertilizer and transportation have directly contributed to a higher price level for corn-to-ethanol.
Small Businesses
Given continuing energy price trends, it is reasonable to assume that more and more small firms will see their competitive positions weakened, leading to capital availability and profitability impacts, and the potential for small-business closures, according to a 2008 study conducted by the U.S. Small Business Administration.
Energy Providers
The U.S. Energy Information Administration estimates that oil imports through 2030 could cost the U.S. $8.5 trillion.
Manufacturing
According to the American Chemistry Council, the impact of the energy crisis on America’s manufacturing and industrial base, its farmers and its workers have been staggering: billions lost in business; 2.9 million lost manufacturing jobs; more than 100,000 lost chemical industry jobs and 100
closed chemical facilities; 182,000 lost forest and paper industry jobs and 232 closed mills; as well as 36 percent of the fertilizer industry shut down or mothballed.
Transportation
Higher fuel prices are projected to cost U.S. airlines $18.3 billion more this year than in 2007. The portion of a passenger’s airline ticket needed to pay for fuel has risen from 15 percent to almost 40 percent, according to the Air Transport Association.
In 2007, the trucking industry spent more than $112 billion on fuel and anticipate that the figure will likely increase to $154.1 billion in 2008, according to the American Trucking Associations.
Agriculture
The U.S. Department of Agriculture reports that farming production expenses for 2008 are forecast to increase to almost $280 billion, up 9 percent from 2007, and following an 11 percent increase in 2006.