Low-income and middle-income households are dealing with higher
energy bills in similar fashion these days
– lowering the thermostat, eating out less, buying cheaper
versions of products they need, spending less on clothes and
medicine, and even changing their plans for education.
Consumers changing what they buy
PRINCETON, N.J.
Low-income and middle-income households are dealing with higher energy bills in similar fashion these days – lowering the thermostat, eating out less, buying cheaper versions of products they need, spending less on clothes and medicine, and even changing their plans for education.
Fuel-oil prices have increased more than 40 percent in the past year and gasoline prices increased by over a third, leaving many low- and middle-income households struggling to pay their energy bills, according to a new survey by the National Energy Assistance Director’s Association released last week.
A majority of households surveyed (57 percent) said energy bills are higher today than they were a year ago. While the impacts of steadily increasing energy costs are being felt hardest by low-income families – a family of four making less than $33,300 a year – plenty of families making between $33,300 and $77,000 say they are feeling the pinch and changing what they buy and how they heat and cool their homes.
More lower-income households reported that their energy bills had increased (63 percent) than any other economic group. Roughly 60 percent of low-income households, 49 percent of moderate-income households, and 42 percent of middle-income households said it is more difficult for them to pay these bills this year, according to the study.
Gasoline prices hit household budgets the hardest, according to the study. Nearly three-quarters of low-income, 70 percent of moderate-income, and 61 percent of middle-income respondents said that increased gasoline costs had a large impact on their budgets.
The two biggest cutbacks across all households are scaled-back purchases of basic household necessities (43 percent) and smaller food bills (43 percent).
As prices at the pump continue to climb, at least 65 percent of respondents of all income groups said they are driving less, while low-income households reported they are much more likely to use public transportation and ride-sharing more.
Low-income households are making sacrifices elsewhere to counter increased home energy and gasoline costs including fewer food purchases (70 percent), not buying medicine (31 percent), and altering plans for their education or their children’s education (19 percent).
Higher wage-earning families are less likely to report financial strain from higher energy bills. But a quarter of families making between $55,000 and $77,700 said it was more difficult to pay their energy bills this year and 65 percent of high-income households reported driving less.
Higher prices are causing households across the economic spectrum to reduce energy consumption. Families reported closing off parts of their home because they cannot afford to heat or cool the space, setting the thermostat at far cooler or warmer settings than is comfortable, and going out to spend time in warmer places. High-income households were much less likely to report that they made these kinds of sacrifices, the survey found.
Ten percent of the people surveyed said they took on an additional job and more than half said that they reduced the amount they put into savings.
Yet despite taking these actions some, 14 percent of households reported that they were behind on paying their energy bills. Eight percent of low-income and 8 percent of moderate-income households said they had had their electricity shut off, while 12 percent of low-income and 4 percent of moderate-income households said they had their natural gas shut off.
Sales of more efficient energy systems and appliances are getting a boost from higher energy prices, according to survey respondents.
The purchase of a more efficient air conditioner was reported by 15 percent, followed by 14 percent that said they bought a more efficient heating system, and 28 percent that reported they bought a more efficient appliance. These appliances typically use less energy and water. More than two-thirds of all households surveyed said they had purchased compact florescent light bulbs.
Consumers are expected to see even higher electricity and gasoline bills in the coming months, the Energy Department said this week in its Short Term Energy Outlook. Average residential electricity prices are expected to climb 3.7 percent this year and another 3.6 percent in 2009. Some utility companies in North Carolina, New Jersey and Ohio have already filed for rate increases.
Gasoline prices are also expected hit a monthly average peak price of $4.15 per gallon in August, the agency said. Higher prices are likely to mean even further cuts in family budgets.
