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"Brace For The Most Dramatic Shutoffs As People
Can’t Afford To Pay Their Electric Bill"
by Epic Economist
"As the worst energy crisis in modern times unfolds across the United States, tens of millions of Americans are now experiencing energy poverty. Stressed supplies and a growing demand amid this summer’s blistering temperatures are leading to the highest prices in a generation. While real wages tumbled 3.6 percent over the past year, electricity prices shot up 16 percent, squeezing consumers. Unfortunately, things are about to get even worse for countless families in the nation, with the U.S. facing a looming crisis of utility shutoffs as a record-breaking number of households fall behind on their power bill payments. Businesses are suffering, too. And a series of shutdowns are set to occur as energy costs eat a larger share of business profits and consumer spending dramatically shrinks.
Natural gas is responsible for powering up nearly 40% of the US electric grid. On Tuesday, NatGas prices soared to the highest levels since 2008. Since June 2020, natural gas is up a staggering 525%. Meanwhile, electricity continues to rise to a blistering 30% year on year. Consequently, more and more people are scrambling to keep up with the rising costs. That’s why utility shutoffs have become more common all around the nation, with lower-income households now thousands of dollars behind on their power bills.
Several power companies reported a surge in non-payment customers. In California, PG&E Corp revealed that there had been a 40% spike in the number of residential customers behind on payments since February 2020. In New Jersey, the Public Service Enterprise Group exposed that the number of customers at least 90 days late has risen 30% since March. Prices for natural gas have been soaring worldwide following the Ukraine crisis. Russia is a major supplier of natural gas to Europe, but the Kremlin decided to retaliate against western sanctions by halting plans to open a key new pipeline, and disrupting Russian exports to Europe. In response, the U.S. government boosted gas exports to European allies, constraining domestic supply and raising prices at home.
The compounding effect of soaring energy bills, rising costs and rapidly declining consumer purchasing power is leading businesses all around Europe to face financial hardships. The U.S. is likely to see a massive wave of business shutdowns as well over the next few months. In fact, Epiq data shows that bankruptcy filings have started to tick back up again. The total number of new commercial and consumer bankruptcies filed in July grew 33.5% over the month prior, according to Epiq, with consumer filings increasing by 34% and commercial cases jumping by 26%.
For their part, U.S. consumers are financially tapped out. They've already maxed out credit cards, depleted savings, and have seen wage gains wiped out due to higher prices of virtually everything. Now, they’re at risk of losing power and set to face another dark winter. The next few months are going to be exceedingly difficult. Things are already starting to get really crazy out there, and global events are going to accelerate even more once the summer is over."