Energy Costs Forecast to Rise Again for 2017 in United States
Energy Costs Forecast to Rise Again for 2017 in United States – According to the forecasts of the World Bank for 2017, energy prices are set to rise again during 2017. The bank looked at the cost of all energy types, including oil, natural gas, coal and electricity and found that based on current financial projections, consumers could expect to see the costs of these energy types increase by almost 25 percent in the next twelve months, both in the United States and around the world. During a period of economic uncertainty for many families, the news that consumer energy prices are set to rise is likely to be unwelcome.
United States – U.S. Energy Information Administration (EIA) Facts
The three major fossil fuels—petroleum, natural gas, and coal—accounted for most of the nation’s energy production in 2015: Natural gas—32% Petroleum (crude oil and natural gas plant liquids)—28% Coal—21%.
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This isn’t an issue that is exclusive to the US: In the UK consumer energy prices are forecast to increase by 5% over the next twelve months, and despite the British government’s commitment to helping homeowners in the country compare their energy prices to find the cheapest deals available, consumers will still feel the pinch of the continued price hikes. According to the World Bank Research, this rise is likely to hit both countries that are included in the Organization of the Petroleum Exporting Countries (OPEC) as well as those countries which are not (non-OPEC countries), although of course OPEC countries will continue to see lower energy prices when compared to equivalent costs charged to consumers in non-OPEC countries.
The End of Uncapped Energy Production
2015 and 2016 marked two years of uncapped energy production, however for 2017 those countries that are a part of the OPEC announced that they would be capping energy production at a rate of approximately 33 million barrels of oil per day. This decision was made because the price of crude oil had dropped below $30 per barrel during the period of unrestrained production, and energy producers are hoping that limiting the availability of the crude oil would increase its cap. The result of this energy cap is likely to be good news for those who own shares in energy companies, but bad news for everyday energy consumers who want to see the cost of their bills stabilize at as low a rate as possible! Nigeria, Iran and Libya (all important crude energy producers) are not included in the plan to limit production, but despite free-flowing oil from these important outlets, long term forecasters have begun to predict a return to higher energy prices throughout 2017.
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The Overarching Effect of Increased Energy Prices
In real financial terms, an increase in energy prices affects the cost of so many other products: food prices, for example, are also likely to increase because energy prices are such a key component in agriculture. This will therefore increase the cost of food production, and the problem will be compounded by the increased cost of freight to get that food from the source of production to the supermarket. This isn’t an issue that will just affect food costs either: anything that needs to be transported a considerable distance (particularly products that are imported from overseas) will see their fright costs, and therefore the costs to the consumer, increase as a result of the increase cost of energy.
Bad News for Motorists in United States
If you rely on your car for transportation then there is more bad news as a result of the changes within the energy market: the average monthly retail prices in the United States for regular gasoline are expected to increase from their current price of $2.30/gallon (based on the average figure for February 2017) to an estimated $2.51/gal in July 2017: a significant increase in a relatively short period of time. Of course, like all markets, the energy market can be volatile and prone to fluctuations: just because the rates are forecast to increase now doesn’t mean that they won’t stabilize by the latter part of 2017. But savvy motorists who are considering changing their vehicle may well want to consider picking a car that is more energy efficient with a focus on good fuel economy, or even choose a hybrid car to make the most of more affordable electrical energy and reduce your dependence on crude oil-based products entirely.
This is a guest article written by Helen Mullins ([email protected])