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Gas, electricity, natural gas prices hurting household budgets: report

VANCOUVER (NEWS1130) – The high price of gasoline plus increases in electricity and natural gas bills are putting the squeeze on household budgets, according to analysis by Scotiabank.

Economist Adrienne Warren says the five per cent more being spent on energy this year could divert as much as $4 billion from other purchases.

“So one has to continue to fuel the car and heat the house or cool the house. It can divert spending that could go either toward other goods — discretionary purchases — or toward saving or paying down debt.”

She says, “the share of household expenditures allocated to energy products and other utilities has been trending higher since the late-1990s” and this year accounts 8.5 per cent of all household expenditures, about a point above the long-term average.”

Gasoline accounts for slightly more than half of household energy expenditures.

According to the report, “Gasoline accounts for slightly more than half of household energy expenditures.”

“Its share of the average household budget has steadily increased over the past decade and a half, reversing the declining trend from the early 1980s through the mid-1990s. Investments in public transit infrastructure that could help reduce private vehicle use areĀ  underway in some areas, but overall progress remains painstakingly slow.”

“Given the potential for real energy prices to continue to drift higher over the medium term, there is a strong economic incentive for Canadians to reduce their energy consumption – or at least slow its rise. Savings could be redirected to other spending, saving or paying down debt. Longer-term, reducing energy consumption would lower the sensitivity of household spending and the overall economy to future price shocks.”