Academic journal article Monthly Labor Review

Household Spending on Energy

Academic journal article Monthly Labor Review

Household Spending on Energy

Article excerpt

The urban population of the United States devoted an average of 8.0 percent of their total annual expenditures to energy over the 1982-2004 period. The share of total expenditures allocated to the purchase of gasoline and motor oil was 3.8 percent; electricity accounted for 2.8 percent of total spending, and natural gas and fuel oil accounted for the remainder.

The share of the household budget spent on energy consumption at different times and by various groups is the subject of "Household energy expenditures, 1982-2005," by David B. Cashin and Leslie McGranahan (Chicago Fed Letter, June 2006).

The share of household spending devoted to energy expenditures--which is a function of energy prices, quantities consumed, and total expenditures--was at its recent high in the early 1980s. During that period, energy expenditures averaged 11 percent of the household budget. Between 1990 and 2004, household spending on energy dropped to an average of 7 percent of expenditures. For last year, 2005, the authors estimate that households saw 8.5 percent of their spending go for energy products.

Until 2005, the inflation-adjusted price of gasoline, the largest component of energy consumption, has been below its 1982 level. However, prices of electricity have gradually declined since the 1980s. …

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