Inflation unpacked | Energy Costs Impact Consumers in Pennsylvania | News

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HARRISBURG, Pa. — Prices are apparently rising on everything these days. Energy costs lead the way.

the combined energy cost U.S. commodities and services rose 27% year-over-year in January, according to the Bureau of Labor Statistics (BLS), fueling inflation rates.

Fuel oil is up 46.5% and gasoline up 40%. Electricity rose 10.7% and piped natural gas jumped 23.9% during this period.

Only the price of used vehicles, up 40.5%, rivaled the surge in energy and its sub-sectors, the data showed.

Supply shortages and disruptions in supply chains, even those not directly related to energy production, have a big influence on inflation, said Matías Vernengo, professor of economics at the Institute. Bucknell University and former senior research director at the Central Bank of Argentina.

And, he said, the situation is now aggravated by the war in Ukraine and the attempted economic isolation of Russia – a world leader in exports of crude and refined oil and natural gas.

“When people talk about inflation, they think it’s demand-driven,” Vernengo said. “Demand has picked up quickly, but we still have three million fewer people employed. … I think it’s a supply shock, like in the 1970s, and it’s showing in the data.

Gas and Oil

Oil prices fell at the start of the pandemic in the United States as fewer people were traveling at the time.

Retail prices have fallen below $2 a gallon in the spring of 2020, and crude oil was trading at that time at negative pricesaccording to the US Energy Information Administration (EIA).

Demand returned, but prices didn’t hit $3 a gallon until the spring of 2021. The national average has stayed north of that price ever since. It gradually reached an average high of $3.70 for all grades of fuel in the week ending Monday and continued to rise late into the work week.

Real time AAA updates show the nationwide average price at $3.72 on Thursday. The average in Pennsylvania on Thursday was $3.87, according to AAA, but had exceeded $4 in some areas.

American crude oil purchase price per barrel in December was $70.55, the latest data available from the EIA. This is not the highest recent price. It was $78.51 in October. It was the highest since October 2014, when the price started a regular dive to $25.52 in February 2016 before recovering.

Government data is lagging the market and new highs were made earlier this year. U.S. crude rose above $116 a barrel on Thursday before falling.

OPEC, or the Organization of the Petroleum Exporting Countries, approved a slight increase in production last fall, but not to the level sought by President Joe Biden, who hoped to lower prices.

In his State of the Union address on Tuesday, Biden announced that the United States and allied countries would release a combined report. 60 million barrels of oil reserves – half of the US strategic reserves.

EIA data shows that the United States imported 672,000 barrels of oil per day from Russia in 2021 – third behind Mexico’s 711,000 barrels per day and far behind Canada’s 4.3 million barrels per day. Saudi Arabia was fourth with 430,000 barrels per day.

” Short term ? Of course,” Vernengo said of whether the reserves would help. “The question is, how long (will the war last)? Tomorrow? Three or four years? It’s a nightmare that never ends.”

Utility costs

According to the latest data from the EIA, Pennsylvanians pay more than the national averages for gasoline and propane, but pay less for electricity, heating oil and natural gas.

The differences are negligible for electricity, but less so for other energy sources.

Home heating oil cost for the week ending Monday $4.04 per gallon averaged nationally, compared to $3.87 in Pennsylvania. another report shows residential propane in the state at $3.12 per gallon, compared to the national average of $2.89.

Electricity in all sectors averaged 10.65 cents per kilowatt-hour in December, down from 9.7 cents the year before, but below the national average of 11.1 cents. However, the nationwide average price for the residential sector in particular was 13.75 cents in December, lower than the Pennsylvania average of 14.37 cents.

In December, natural gas was $13.13 per thousand cubic feet nationally; it was $12.23 in Pennsylvania.

Nils Hagen-Frederiksen, press secretary for the Pennsylvania Public Utility Commission, said consumer usage and energy costs can significantly alter monthly utility bills. Utility rates, however, are set through a “significant and lengthy” process that can take years to change.

“Typically, energy costs are about two-thirds of a monthly utility bill, but it can be even higher as usage increases,” Hagen-Frederiksen said.

Eric Scicchitano is CNHI’s Pennsylvania reporter. Follow him on Twitter @ericshick11.

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