Inflation Takes a Bite Out of Christmas Cheer

COMMENTARY Energy Economics

Inflation Takes a Bite Out of Christmas Cheer

Jan 5, 2023 3 min read
COMMENTARY BY
Rachael Wilfong

Research Assistant, Energy, Climate, and Environment

Rachael is a research assistant in the Center for Energy, Climate, and Environment at The Heritage Foundation.
Natural gas prices are estimated to be around 28% higher, and electricity prices are estimated to be about 10% higher than last winter. dszc / Getty Images

Key Takeaways

As of the week of Dec. 12, the average cost for residential heating oil hit $4.56 per gallon, which is about 95% higher than it was the week of Dec. 14, 2020.

Unfortunately, inflated costs do not end with fuel or the cost for presents under the tree. Families can also plan to pay more for their holiday meals this winter.

Congress and the administration ought to avoid picking winners and losers when it comes to energy, and work to eliminate regulatory barriers that drive up prices.

Americans may want to light the fireplace more often this winter and cut back on the holiday festivities, according to new data from the Energy Information Administration and the Bureau of Labor Statistics.

Energy costs have remained consistently high for over a year, having risen over 13% since November 2021. So, American families can expect to pay significantly more for their heating oil as the colder months approach. As of the week of Dec. 12, the average cost for residential heating oil hit $4.56 per gallon, which is about 95% higher than it was the week of Dec. 14, 2020, shortly before President Joe Biden took office.

Natural gas heat and electricity are no exception. According to the Energy Information Administration’s winter fuels forecast, natural gas prices are estimated to be around 28% higher, and electricity prices are estimated to be about 10% higher than last winter. Should we see a harsher winter, those numbers increase. For families in the West, Midwest, and Northeast, where over 50% of households rely on natural gas heating for their homes, these price shocks carry extra weight.

Beyond anticipating a rise in the cost of heating their homes, American families can also plan to spend more on fuel for their holiday travel. While prices for regular gasoline and diesel fuel have dropped slightly, they’re still much higher than they were before Biden took office. As of the week of Dec. 19, regular retail gasoline prices were still 40% higher than they were during the week of Dec. 21, 2020, and diesel prices were 75% higher.

These consistently high fuel costs also have the potential to affect the cost for gifts on your Christmas lists. Approximately 15 million registered commercial trucks on the road are responsible for transporting over 70% of U.S. goods (based on value). While gasoline powers about 23% of that fleet, diesel fuels over 75% of it. So, as diesel and gasoline prices continue to rise, to the extent that they can, truckers pass along the costs to their customers, who then pass along the costs to the consumer.

Unfortunately, inflated costs do not end with fuel or the cost for presents under the tree. Families can also plan to pay more for their holiday meals this winter.

New Bureau of Labor Statistics data, released on Dec. 13, show that food prices have risen 10.6% since November 2021. This translates to families paying 7.8% more for Christmas ham and 9.6% more for fresh vegetable side dishes. If you’re planning on setting out a plate of cookies and a glass of milk for Santa, you can expect to pay 14.7% more for milk and 19.2% more for cookies.

With inflation above 7%, American families already feel a pinch in their wallets around the holidays, absent the rising costs to heat their homes, drive their cars, and feed their families. Yet, in the midst of consistently high prices, the Biden administration continues to block solutions and feed inflation with poor policies.

The administration continues to slow-walk oil and lease sales, push misguided net-zero emissions commitments, and generally work to eliminate the use of conventional fuels like oil, coal, and natural gas.

Congress and the administration ought to avoid picking winners and losers when it comes to energy, and work to eliminate regulatory barriers that ultimately drive up prices. Doing so would offer some financial reprieve to countless American families and bring hope for the year to come.

This piece originally appeared in The Daily Signal on 12/20/2022