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Below are the monthly updates from the most current October 2021 fuel price data (GasBuddy.com) and August 2021 electricity and natural gas price data (US Energy Information Administration). To view additional data and analysis related to the California economy visit our website at www.centerforjobs.org/ca.
In August, California’s rising energy costs again broke new barriers as the average residential electricity rate (12-month moving average) surged to the highest among the contiguous states. California’s residential price currently is on course to surpass high-cost Alaska as well. While California leaders often lay claim to the state leading in a number of arenas, the most current price data also shows the state continues to lead in imposing high costs of living on its households and high costs of doing business on its employers:
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Gasoline: Highest among all states
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Diesel: Highest among all states
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Residential Electricity Prices: Highest among contiguous states
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Commercial Electricity Price: Highest among contiguous states
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Industrial Electricity Price: Second Highest among contiguous states
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Residential Natural Gas Price: Seventh Highest among contiguous states
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Commercial Natural Gas Price: Ninth Highest among contiguous states
In the current circumstances, these costs feed directly into the challenges faced by many in the state, as lower income households attempt to rebuild their employment and income prospects and as small businesses as well as larger service and tourism-based businesses attempt to reopen and recover from the state-ordered shutdowns. Diesel prices in particular exacerbate the challenges now affecting all points in the supply chain, further raising already soaring transport costs and adding further burdens to core state industries such as agriculture which are already losing market access due to supply chain
congestion at a critical time in their cash flows.
These costs continue to affect the state in a disparate manner. In the recently released energy consumption data for 2020, the lower income interior regions of the state show estimated household electricity consumption levels that are as much as 78% higher than the higher income coastal regions. Comparing Inland Empire to San Diego/Imperial, estimated household natural gas usage is 59% higher. Energy usage in the interior regions is higher because weather has greater extremes than in the milder climate but higher cost coastal areas. Cost impacts are greater because average household income is lower.
In a broader framework, the state agencies have committed to policies requiring essentially full electrification of the California economy. At the same time, these policies are resulting in California energy prices at or near the highest among states. This is a recipe that will continue to undermine the state’s competitiveness for traditional middle class jobs. Through these policies, the state is seeking to overcome the basic economic principle that demand for something does not rise if the price keeps getting higher, through the simple expedient of ensuring there is no other choice.
At the recent COP26 in Scotland, California sought to portray the state as a model of climate change actions that should provide lessons to other countries. But not everyone has a booming tech industry center such as the Bay Area to counter the economic harm being done elsewhere in the economy. In following the energy price data, however, those lessons instead provide more of a cautionary tale of pursuing policies without consideration of the eventual costs.
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