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Below are the monthly updates from the most current May 2020 fuel price data (GasBuddy.com) and March 2020 electricity and natural gas price data (US Energy Information Agency). To view additional data and analysis related to the California economy visit our website at www.centerforjobs.org/ca.
While easing slightly for gasoline, the level of California energy prices compared to the rest of the US remain high as a result of the state’s regulatory mandates. These much higher costs will take on added significance as the state moves forward with its fledgling restart and recovery period.
Current projections from the Governor and Legislative Analysts’ Office anticipate a relatively prolonged recovery period, with job levels not recovering until after 2024. These conditions consequently would be similar to the slow recovery just experienced by the state from the recession that began in 2008. The key difference is that energy is starting at a much higher price point and will continue to grow higher as additional components on tap in the regulatory programs continue to come into play.
For households, these higher costs will continue to command a higher relative share of incomes compared to other states, both from direct payments for gasoline and utilities but also for other goods and services as the energy costs are incorporated into prices for everyday purchases. Recovery will be more challenging as the energy-related components in the cost of living continue to rise, especially if job markets are slow to recover as projected and growth in household incomes remains behind the growth in costs.
For employers, these higher prices apply directly to the costs of operation, and mean currently constrained cash flow resources going to regulation-driven costs rather than resumption of prior job levels. In most other parts of the US, the current lower energy prices will serve to help accelerate the recovery. In California, costs will continue to rise and have the opposite effect.
The extent of these cost barriers is illustrated in the charts below comparing the most recent California energy price levels contained in this report to those in other regions.
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