Energy Crunch

We look at the CPI Energy Index and what it means for US consumers

Energy Crunch
Photo by Jp Valery / Unsplash
The Consumer Price Index (CPI) came in hotter than expected at +8.3% despite the Energy CPI Index falling for the second straight month due to lower gasoline prices

Gasoline prices largely follow oil prices, which have fallen partially due to the SPR release

The SPR release ends soon

The Biden Administration has fewer levers to pull to manage rising electricity and natural gas prices

All three primary components of the Energy CPI Index - gasoline, electricity, natural gas - are higher than the prior year by 15% or more for the second month in a row, the first time that has happened since 1980

We dig into the data and look at energy costs for U.S. consumers

Energy Costs Remain High

The Energy CPI Index has dropped for two months in a row.

The gasoline sub-index dropped for the second month in a row, while the electricity and natural gas sub-indices both rose for the sixth consecutive month.  

All three primary components of the Energy CPI Index remain above 15%, now for the second month, a rare occurrence that hasn't happened since 1980.

BLS publishes price series for its Energy CPI sub-indices.  For a gut-check we compared to EIA data.  

Gasoline from the CPI sub-index tracks nearly perfectly with regular grade gasoline prices from the EIA.

EIA electricity prices lag CPI data by a couple months and have room to move higher.

Likewise, EIA residential natural gas prices are delayed versus the CPI by two months, but in this case EIA data seems to suggests CPI natural gas prices have room to move higher.

The Bottom Line

We utilized volume, price and customer data from electricity and LDC/natural gas datasets and utilized miles driven, change in gasoline prices and an assumed miles per gallon to estimate the energy inflation impact to consumer bottom lines.

We expect these numbers to move higher as upcoming winter demand for natural gas and electricity roll through at significantly higher prices.

Relative to what is happening in Europe with energy inflation, the numbers in the U.S. don't seem so bad.... yet.