The Short Run Weekly Issue 33 Fellow Shortrunners, For anyone who owns a house or pays utility bills, they know that the price of electricity has increased dramatically over the past few months. In most areas of the country, prices of some types of energy such as home heating have tripled, and in some places such as California, the cost of electricity has increased by a factor of 10. Across the country, we have experienced one of the coldest winters in recent history. This winter has followed several years of pretty warm winters which had led producers to supply a smaller amount of natural gas than was necessary to heat homes.
Electricity makes up the second source of home heating, but on a scale of half that of natural gas.
Because natural gas reserves were low going into this winter, the price of home heat has risen steadily, adding to inflationary pressure across the country. California's case is a little different. Like most states, California has begun the process of de-regulating its power industry. Unfortunately, government stipulations during the process have prevented California's power industry from raising prices in the face of rising costs. To give an example, look at New York.