DiNapoli: Higher Energy Prices May Slow Recovery
Paying more at the pump may slow New York’s fragile economic recovery, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. The rising price of oil—which tripled to over $100 per barrel since hitting a $30-per-barrel low in December 2008—has driven up food, transportation and heating costs for consumers, businesses and government agencies.
“The sprouts of economic growth we’ve seen recently may be mowed down by high energy costs,” said DiNapoli. “It’s costing a lot more to fill up your tank, and price hikes for oil and gas also mean more expensive food and rising heating costs. If the current upward trend holds, it’s also going to cost more to run basic government services like the MTA. All this could put another chill on the economy just as it’s starting to thaw. If we need another reminder, here it is: we need to find alternatives to the expensive, pollution-heavy fossil fuel energy we rely on.”
DiNapoli’s report estimates that the average cost of driving a car in New York totaled $1,646 during the April 1, 2010 to March 31, 2011 period, which was $288 more than during the prior twelve-month period. If current prices are maintained over the next twelve months, the cost of driving a car could increase by another $523 to $2,169. This would represent a two-year cumulative increase of $811, or 60 percent. The increase would be even higher for SUVs and light trucks.
Similarly, the statewide average cost to heat a home by oil was $2,757 during the April 1, 2010 to March 31, 2011 period, which was $492 more than the prior twelve-month period. If current prices are maintained over the next twelve months, the cost of heating a home by oil could increase by another $535 to $3,784. This would represent a two-year cumulative increase of $1,027, or 45 percent. The cost increase would be higher in colder regions of upstate New York.
DiNapoli’s report cites a New York State Energy Research and Development Authority study that named New York the most energy-efficient state in the nation, due to a widespread public transportation system and the state’s highly-urbanized population. Despite its efficient use of power, New York remains the fifth largest consumer of energy in the nation.