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Northeast's Poorest Families Bear the Brunt of Rapidly Escalating Energy Prices Says Study

Posted on: Monday, 5 November 2007, 18:00 CST

ALEXANDRIA, Va., Nov. 5 /PRNewswire-USNewswire/ -- If people thought the scarefest ended with Halloween, the cost of crude oil puts pretenders to shame as home heating costs become a real fear factor for many, especially the Northeast's low- and middle-income families. With crude oil prices trading near $100 a barrel, home heating oil and transportation costs are surging. The cost of home heating oil, the heat source for nearly 35 percent of households in the Northeast, could rise as much as $0.70 a gallon this winter, reported the Wall Street Journal, causing consumers and elected officials fears to rise on how many are going to afford heating their homes while meeting their other needs.

A study, released by Americans For Balanced Energy Choices (ABEC), says that America's poorest families will be the hardest hit by skyrocketing fuel costs. In fact, "The Rising Burden of Energy Costs on American Families, 1997-2007," study predicts that the residential and transportation energy bills of America's poorest families will rise from 23 percent of after-tax income in 1997 to an astonishing 46 percent in 2007.

"The prices of most consumer energy products have doubled in the past five years. In 2007, the 61 million American households with annual incomes of $50,000 or less - the majority of American households - will spend nearly 20 percent of their after-tax income on energy," said Joe Lucas, executive director of ABEC. "In 1997, energy consumed just 10 percent of the after-tax income of these working families. Only electricity, produced mainly from domestic coal, has maintained a stable price trend over the past decade.

"Our state officials need to be very careful as they start crafting potential climate change legislation that they don't inadvertently seriously hurt the Americans most susceptible to increased energy costs because of overly ambitious state, regional and national programs," Lucas added.

Key findings include:

-- For a majority of low- and middle-income families, energy costs are consuming nearly one-fifth of after-tax household income, an amount traditionally spent on major categories such as food, housing or health care. In 1997, low- and middle-income families spent about 10 percent of their after-tax income on energy.

-- Between 1997 and 2007, average energy bills for American working families earning between $10,000 and $50,000 per year will nearly double, from $2,401 in 1997 to an estimated $4,468 in 2007. Most of this increase is due to higher costs for gasoline, which will increase from $1,143 per family in 1997 to an estimated $2,654 in 2007. These estimates may be conservative if gas prices continue their steady escalation above $3 per gallon.

-- Residential electric bills for working families earning between $10,000 and $50,000 are projected to increase modestly from $811 in 1997 to $1,088 in 2007. The relatively low rate of electric price increases is due in large measure to the utility industry's reliance on low-cost coal for a majority of its energy inputs.

-- The transportation share of total energy bills for the 61 million families earning less than $50,000 - the majority of American households - will rise from 44 percent in 1997 to 56 percent in 2007. Residential electricity costs will decline from 36 percent of the energy budgets of these families in 1997 to an estimated 26 percent in 2007, due to the relatively low rate of price increase for residential electricity compared to other energy sources.

-- The poorest families, well below the federal poverty line and earning less than $10,000 per year, are being squeezed the hardest by recent energy cost increases. Their residential and transportation energy bills will rise from 23 percent of after-tax income in 1997 to an estimated 47 percent in 2007. Many of these families will receive state energy assistance to help reduce the burden of higher energy costs. However, most states say they are expecting higher number of applicants than last year for home heating cost assistance and states are unsure where they will get the funds to meet those requests.

To see a full copy of the report, go to http://www.balancedenergy.org/.

Americans for Balanced Energy Choices is a non-profit, non-partisan group that promotes a dialogue with recognized community leaders across the nation to discuss balancing America's growing demand for electricity with the need to protect the environment. ABEC counts more than 100,000 members nationwide. Because of its prominence in the nation's energy mix, electricity from coal is a major focus of the dialogue.

Americans for Balanced Energy Choices

CONTACT: Cathy Coffey of Americans for Balanced Energy Choices,+1-703-302-1221, +1-703-597-1275, ccoffey@balancedenergy.org

Web Site: http://www.balancedenergy.org/

Source: PRNewswire-USNewswire

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