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American anger at gas prices fueled by rising household energy costs

Americans are spending 12 percent of their disposable income on energy costs – up from 7.7 percent in 2002, a new study says. Gas prices are the biggest part of the equation.

By Staff writer / May 18, 2011

Oil company executives from ExxonMobil, Chevron, ConocoPhillips, Shell Oil, and BP America are sworn in on Capitol Hill in this June 15, 2010 file photo. With gas prices high, pressure on Congress is building.

Haraz N. Ghanbari/AP/file


Congress's failed bid Tuesday to rein in multibillion-dollar tax breaks for oil companies was merely a first shot across the bow, as Americans frustrated by rising energy costs press their lawmakers to target the industry, according to a new study.

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The analysis by ClearView Energy Partners estimates that Americans are now spending 12 percent of their disposable income on gasoline, electricity and heating – up from 7.7 percent in 2002. With Americans' disposable income increasing since 2002, households are paying more than double what they did in 2002 – $4,410 a year in 2011, compared with $2,180 a year per in 2002.

Gasoline prices are responsible for much of the jump, with electricity and heating actually down as a share of the household energy budget since 2002. Gasoline, by contrast, now takes up about 38 percent of the average household energy budget, compared with 24 percent in 2002.

The mounting role of oil prices in rising household energy costs means that states with residents that drive more or rely on heating oil are being hit disproportionately hard by the energy crunch. Amid a weak economy with high unemployment rates, that could create new political pressures that could play out in Congress over the next year, says Kevin Book, managing partner at ClearView Energy Partners, a Washington-based energy market research firm.

"You have the same consumers, but they have less cash, less credit, and basically the same gas guzzling cars," he says. "It's a much tougher picture for them overall when you factor in the weak economy."

Differences state by state

It's also resulting in some striking disparities. In Mississippi, for instance, residents pay 17 percent of their disposable household incomes for energy, compared with 10 percent for Massachusetts residents. The reasons are several. The amount of driving per year, income levels, gas prices, and the level of unemployment all factor in.

Mississippians drive an average of 14,200 miles a year, are paying about $3.30 per gallon, and make about $29,650 per household, according to ClearView's calculations. In Massachusetts, residents drive only about 8,400 miles per year and have an average income of $46,300.

There are mitigating factors, though. At the same time, they pay more for air conditioning (for obvious reasons) and less for heating (for less obvious reasons). Some 40 percent of Massachusetts homes are heated by fuel oil, whose prices have soared.

In the end, the combination of factors means Massachusetts residents have it easier on average than Mississippians when it comes to paying their energy bills, ClearView found.


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