Northeast Utilities System (NU), CenterPoint Energy, Inc. (CNP): Energy Bills Are the Lowest in a Decade

Some have wondered why gas prices haven’t plunged while America’s energy production booms. The simple answer is that oil is a global commodity and fairly easy to transport, so it’s priced on the global market. Rising U.S. production has been mostly offset by Iranian sanctions. There’s little net impact on price.

Natural gas is different. It’s more difficult to transport, so prices tend to vary depending on location. America’s energy boom has pushed natural gas prices down, hitting decade-lows last year. That has a big impact on home energy bills, as the Energy Information Administration noted this week:

Consumers spent 2.7% of their household income on home energy bills last year, the lowest percentage in 10 years. Aggregate home energy expenditures by U.S. households fell $12 billion in 2012 from the 2011 level. In 2012, prices for residential natural gas decreased 3% from the previous year, while household electricity prices stayed about the same.

Here’s what it looks like over time:

The EIA goes on:

On average, households spent $1,945 on heating, cooling, appliances, electronics, and lighting in 2012. This total includes home use of electricity, natural gas, fuel oil, propane, kerosene, wood, and coal but excludes fuels used for transportation.

So, about $2,000 per year per household. Given the relative decline over time, this is a savings of about $1,000 per household per year compared with the early 1980s. The utility-bill savings also wipes out a portion of the rise in gasoline prices over the past decade.

Northeast Utilities System (NYSE:NU)Take a couple real-world example. Last year, a subsidiary of Northeast Utilities System (NYSE:NU) “asked state regulators … to approve a nearly 16 percent cut in power rates for its 1.1 million electricity customers,” according to The Boston Globe. “That would bring the charge to its lowest in eight years and save the average customer about $6 a month.” CenterPoint Energy, Inc. (NYSE:CNP) announced that it was adjusting its gas supply rate for Arkansas customers’ natural gas bills. “This means a bill that was $100.15 last November will be $91.58 next month,” it wrote. “With natural gas prices much lower than last year, our customers will save even more on heating their home and water this winter.”

How long will this last? That’s anyone’s guess. But analysts at Citigroup Inc (NYSE:C) have an interesting theory. Commodity prices tend to move in drawn-out, decade-long cycles. The past decade has brought rising prices for virtually all commodities, from oil to gold. Now, driven by slowing economic growth among developing countries, we may be heading into a new commodity down cycle. “Citi expects 2013 to be the year in which the death bells ring for the commodity supercycle after its duly noted sunset,” analyst Edward Morse wrote this month. Timing these cycles has humbled many analysts, but there’s a clear trend right now toward rising energy output, slowing economic and population growth, and rising energy efficiently. Those three don’t bode well for a continuation of the commodity supercycle. Lower energy bills might be here for a while.

The article Energy Bills Are the Lowest in a Decade originally appeared on Fool.com.

Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool owns shares of Citigroup.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!