As the United States Senate passed a major budget reconciliation bill dealing with climate change, energy sources, health care, and corporate taxes this weekend, there has been a lot of public whining from Republicans and industry, saying that the bill will increase, not lower inflation.
Judging from my family’s experience, the bill will lower inflation by decreasing energy costs.
As regular readers may recall, my household has spent years in efforts to reduce our carbon footprint. We have electrified everything in our home, including a geothermal heating/cooling system. We reduced our demand by increasing our insulation and installing LED lighting. We drive our fully electric Chevy Bolt for local driving. (For trips over 200 miles, we drive our plug-in hybrid Chrysler Pacifica, which gets better mileage in gasoline mode than the non-hybrid version.) We own panels in a solar farm because our home was not a good candidate for rooftop panels.
So, this summer, our monthly electricity bill is $17.35, which is the delivery charge from our electric utility. This covers all our household lighting, cooling, laundry, electronics, water heating, etc. plus all our local and short-trip driving.
Meanwhile, many households are burdened with paying $100 to fill their gas tank for the week, plus the cost of their household electricity and methane, propane, or other fuels that they use for heating water, cooking, drying clothes, etc.
A large share of recent inflation is due to increased fossil fuel prices. For our family, that has been felt mostly in the higher cost of food, which is largely driven by the expense of fuel.
I realize that not every household will be able to follow our exact path to be nearly free of fossil fuels but the Inflation Reduction Act just passed by the Senate, which is expected to be passed by the House and sent to President Biden to sign into law later this week, will go a long way to reducing expensive fossil fuel use for residents. As more renewable power comes on line, electricity costs will come down because it is cheaper to produce than fossil fuel electricity. There are rebates targeted at lower-to-middle income folks to help move to electric vehicles, which are much cheaper to run than internal combustion engines. As battery costs have fallen, electric cars are already around the same price as some conventional cars/trucks, so the rebates may make them cheaper to buy.
It’s true that inflation will not suddenly disappear, but this bill has provisions that will bring it down and will help to decrease future inflation spikes by removing inherently volatile fossil fuel prices from the center of our economy. The bill is projected to save average households about $500/year in energy costs. Some households, such as ours, will be able to save much more than that.
So, let’s get this done and enacted! The sooner we do, the sooner it will help people and the planet.