Electric power bills going up in US

Discussion in 'General' started by R P, May 24, 2022.

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  1. With coal and nat gas spiking with less production, more demand in summer, and reserves now running dry, look for much higher electricity bills. I wonder if the public charging stations will be upping their price, too.
    https://www.smh.com.au/politics/federal/power-bills-tipped-to-rise-as-russian-invasion-drives-up-coal-prices-20220405-p5ab3t.html
    https://www.reuters.com/business/energy/why-are-us-natural-gas-prices-soaring-2022-05-06/
    So unless you have your own roof top solar at home, going to cost more to drive your EV, just like ICE cars.
     
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  3. teslarati97

    teslarati97 Well-Known Member

    Tesla Supercharging will probably be the first to hike prices before Electrify America, so that will the leading indicator.
     
  4. Our best hope is if Powell does larger and faster interest rate hikes down there. We need to kill inflation, instead of letting it eat us up. The longer we wait, the worse it will get. Markets will crash, maybe housing too, but that would also be good. Too much buying and spending happening with money that people and govts don't have.
     
  5. marshall

    marshall Well-Known Member

    Last edited: May 24, 2022
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  7. marshall

    marshall Well-Known Member

    General inflation, yes. Local power bill, not much.
     
  8. The power producers are also hit by inflation, so they will have no choice but to pass on the costs,... or shut down power. That is already happening in parts of the US (blackouts and brownouts), where producers are way behind upgrading their infrastructure to keep up with demand, and now their costs will be rising, too. Don't forget most power in the US still comes from nat gas and coal. This problem will only get worse, as I can't see energy prices going down without production increasing to meet demand.
     
  9. ITown

    ITown Active Member

    Agree that high inflation = bad. It's unclear to me how much higher interest rates will hit inflation. It certainly will hurt the auto industry - which heavily relies on car loans in order to drive sales. Probably hurts the BNPL (buy now pay later) industry too - because their lending costs will increase substantially.

    But stuff like groceries and energy - I don't have a clear idea of why increasing interest rates will do anything to impact inflation on those types of things.
     
  10. Higher interest rates always cool inflation, has happened many times in the past. Inflation is caused by too much demand and money buying too scarce goods. Higher interest rates cool that demand, and prices go down, simple as that.

    Remember, everything, incl your groceries go up in price when costs go up. One of the biggest factors there is diesel fuel which has gone up due to higher oil prices caused by lower production not keeping up with demand. And when prices go up, there is pressure on wages, which then causes more inflation.

    Same with house prices and cars. People are buying them because borrowed money is cheap. Higher interest rates will quickly cool that.

    Only problem is that we are late with raising interest rates, because they thought it was "transitory". Now the problem is much worse, and will cause considerable more pain to fix. IE maybe a recession and lost jobs, not too mention a lot of investment nest eggs shrunk badly.
     
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  12. ITown

    ITown Active Member

    Sorry for the long post - not aiming to get into a debate. Just hoping share a few thoughts here! I agree with a lot of what you wrote. :)

    Just for reference, I majored in economics and am familiar with the concept. :) I'm also familiar with stagflation - which is when interest rates do not bring down inflation.

    My question was more around the mechanics of the cause-effect of interest rates -> energy demand.

    By definition, costs go up when groceries become more expensive. Not sure if this is what you were trying to say - if so, then I agree.

    This is a little complicated, but this is my assessment:
    - Oil companies lost a huge amount of money in 2020 because covid shut down the economy. The economy shut down led to oil demand plummeting (fewer people driving to work, flying, etc), and OPEC chose not to cut supply. As a result, there was a huge oversupply of oil, and US oil companies lost a ton of money as a result. More than 100 oil & gas companies went bankrupt.
    - Now that demand has returned, OPEC has again refused to take action, leading to insufficient oil supply and significantly higher oil prices.
    - Wary of taking huge losses again, oil companies are choosing not to make risky investments (example: if profitable at $100+/barrel, and current oil prices are $110/barrel, an oil company will not want to invest in extracting that oil because there's too much risk of it becoming unprofitable in the future - and there are significant costs associated with setting up extraction).
    - Lastly, the Russia/Ukraine war cut supply further. However, the US recently made overtures towards normal relations with Venezuela, which may help stabilize gas prices.

    From what I understand, increasing wages applies pressure on prices to go up. I'm not sure how stable the relationship is between higher costs and higher demand, without strong unions.

    Definitely agree here, although I think some other factors are playing into the housing market as well. In particular, covid has led to a surge in tech workers leaving the expensive cities and buying up property in cheaper areas, while working remotely. I'm not sure to what degree this is the case in Canada, but it's definitely true here in the states.

    Agreed. Startups in particular are in trouble. Access to funding has evaporated in the past few months, and companies who cannot ride this out will not have any favorable options. Either be acquired cheaply, or shut down, or raise funds with very unfavorable terms.
     
  13. OK, I don't wish either to get into an economic debate. And yes, there are always complications, with politics, wars, etc, etc. But since you did take economics I hope you agree that supply and demand are the biggest factors.

    Anyway, this thread is about electricity prices going up, which may not be a good thing for the EV movement. I can't see that not happening given how nat gas and coal is going up. There is no way renewables can expand fast enough to alleviate those costs.
     

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