Submitted by EnergyTechStocks.com
America’s federal power agency has warned that high power prices could plague the nation “for years to come.”
Citing high commodity prices for natural gas and coal, which were the fuel sources for 18% and 50%, respectively, of U.S. electricity generation in 2007, the Federal Energy Regulatory Commission (FERC) said this “may be the beginning of significantly higher power prices that will last for years to come.” The agency didn’t say exactly how high it thinks prices could rise, but EnergyTechStocks.com has learned that one major U.S. electric utility is now assuming in its internal forecasts that power prices in its region will double within five years or less.
The FERC assessment, rendered on June 19, is particularly worrisome since sky-high electric rates would appear to represent an even greater threat to the U.S. economy than high gasoline prices. That’s because electricity is an even more pervasive aspect of American economic life than gasoline. Indeed, after the oil shocks of the 1970s, all American business essentially became electrified in order to improve efficiency, meet new environmental regulations, and minimize exposure to another oil shock.
With U.S. presidential candidate John McCain now leading the charge for cars and trucks that run on electricity, the prospect of sharply higher electric rates for years to come could put a dent in this promising alternative approach to personal transportation.
In discussing the future of power on June 19, FERC chairman Joseph Kelliher outlined what might be described as a “no-win” situation that the U.S. finds itself in. He reportedly said, “The United States cannot simultaneously make the massive investments necessary to assure our electricity supply, make additional large investments to confront climate change, and lower electricity prices. Doing so would likely result in failure.”
For a U.S. energy official to make such a dour public statement is extraordinary – and a clear warning to investors that, as much as inflationary pressures are starting to hit the U.S. economy, worse lies ahead.