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How affordable is our energy? Here’s what consumers say as of April 2016

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See the Energy Survey Project homepage here.

Energy Survey Key Findings

Data from 11 Quarterly Samples, Oct 2013 – April 2016

  • In April 2016, the affordability index for home energy was 135 and the affordability index for gasoline was 129.
  • The gasoline affordability index fell by 23 points from January 2016 which recently set the high mark of 152.
  • Over the previous ten quarters (not including April 2016), the mean affordability indices were 126 (±4) for home energy and 87 (±2) for gasoline.
  • For three straight quarters, Americans have viewed gasoline to be just as affordable as home energy; April 2016 saw the smallest difference between affordability points since the inception of the survey. This differs from respondents’ divergent views throughout 2014.

As part of the U-M Energy Survey’s ongoing reports regarding the affordability of energy, this brief focuses on the newest wave of data through April 2016. We measure American consumers’ views of their energy costs with two affordability indices, one for home energy and the other for gasoline. Each index is based on the costs that consumers find unaffordable compared to actual energy costs—their own home energy bills and the national average price of gasoline—during the month they were surveyed. (See the Affordability Indices Overview for further detail on how we compute each index.)

For home energy, little trend was found when comparing its affordability index in April to the previous ten quarters. In April 2016, consumers said that they spent an average of $159 per month on home energy bills. They also responded, on average, that they would find a monthly energy bill of $326 to be unaffordable. The April 2016 value of 135 (±11) was only slightly higher than the October 2015 home energy affordability index of 122 (±10).

Unlike the previous report (comparing January to October 2015), the affordability index for gasoline in January 2016 dropped from the previous quarter, however it was still higher than all but two of the past nine quarters. There was a 23 point decrease in the index from 152 (±9) in January 2015 to 129 (±7) in April, and the average per-gallon price of gasoline increased from $2.06 in January to $2.19 in April. On average, consumers say that they would find gasoline to be unaffordable if it reached $5.56 per gallon.

This makes for the third quarter in a row that consumers view gasoline to be as affordable as home energy. That’s a notable contrast to the situation through the end of 2014 when consumers felt that gasoline was much less affordable than home energy. April 2016 also marks the quarter in which respondents felt most similar about the affordability of gasoline vs home energy thus far; the 5 point difference is the closest since the survey began.

For three consecutive years, the affordability index value for gasoline has significantly decreased from January to April. This shift has coincided with a similarly significant increase in gasoline prices over the same time frame. This difference may be attributed in part to an annual shift towards summer-blended fuel which is more expensive to produce because it contains additives to reduce pollution and smog during the summer ozone season.

About the Energy Survey

A collaboration between the Energy Institute (UMEI) and Institute for Social Research (ISR), the U-M Energy Survey is a rigorously designed, highly objective survey of Americans’ attitudes about energy. It is administered as a quarterly rider added to ISR’s Surveys of Consumers. This world-renowned survey of consumer attitudes (SCA) forms the basis for the Index of Consumer Expectations, which is a component of the Index of Leading Economic Indicators issued monthly by the U.S. Department of Commerce.

Using a nationally representative sample of U.S. households, the U-M Energy Survey probes consumer attitudes and beliefs about energy at a deep level, independently of particular sources or forms of energy. By eliciting public perceptions regarding key facets of energy including affordability, reliability and environmental impact, it generates valuable research data that will foster well-informed public discussions of energy issues and policy for years to come.

The U-M Energy Survey was first administered in October 2013 and is conducted quarterly.