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

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!