Madhumitha Jaganmohan
Research expert covering climate and environmental sustainability
Get in touch with us nowFuel price surge
Post the coronavirus pandemic, when many countries began loosening the constraints put in place, a greater power demand brought about a worldwide shortage of electricity-generating fuel sources such as natural gas and coal. Although U.S. consumers were spared the blackouts and exploding energy bills experienced in other parts of the world, there was nevertheless a significant climb in the U.S. energy consumer price index. In the years ahead, this index is expected to rise even further as oil benchmarks such as the WTI are on track to succeed the 2008 peak and gasoline prices smashed through the five U.S. dollars per gallon barrier.Electricity prices and the costs of operating a power plant
The retail price for electricity in the U.S. stood at an average of 12.5 U.S. cents per kilowatt hour in 2022, the highest annual average on record. Electricity prices are influenced by several factors, including government subsidies or taxes, weather patterns, transmission infrastructure, as well as industry regulations. More importantly, the cost and price of energy also differ based on the technology available for each energy source. Solar thermal and nuclear power plants have some of the highest base overnight costs, due to the sophisticated mechanization underlying their respective energy generation process. Meanwhile, operation and maintenance costs are often lowest for renewable energy sources that do not rely on a feedstock or fuel for combustion.Regarding retail prices by type of customer, households pay typically more for electricity than commercial and industrial users. In 2022, the average household electricity price in the U.S reached 15.12 U.S. cents per kilowatt hour, while it stood at 8.45 cents per kilowatt hour for industries.
