Washington's Energy Indicators

21.  Energy Price Trends — Average Energy Prices by Sector

AVERAGE ENERGY PRICE TRENDS BY SECTOR IN WASHINGTON REFLECT THE MIX OF FUELS USED IN EACH SECTOR: ELECTRICITY AND NATURAL GAS IN COMMERCIAL AND RESIDENTIAL BUILDINGS, PETROLEUM FOR TRANSPORTATION AND A MIX OF LOWER COST FUELS IN THE INDUSTRIAL SECTOR.

As in the rest of the country, average energy prices in Washington peaked in the early 1980s and have since declined steadily. The trends have been similar, but not uniform across end-use sectors. The industrial sector bore the brunt of increasing energy prices in the 1970s, but has enjoyed a 35 percent decrease in real energy prices since 1985. Residential and commercial sector prices increased less in relative terms in the 1970s, but have since fallen only slowly. The prices of transportation fuels peaked in 1982 and have fallen steadily since.

The price trends depicted are mainly a function of the fuels used in each sector. The fuel mix has been similar for the residential and commercial sectors since 1970, accounting for the almost identical price trends. Industrial energy prices are lower for several reasons: the sector is much less reliant on electricity, which is expensive relative to other fuels; inexpensive biofuels account for 20 percent of industrial energy consumption in Washington (but only 3 percent of energy expenditures); and larger customers tend to pay a lower price for each fuel. Transportation fuels are almost exclusively petroleum-based — prices in this sector rise and fall with the global price of crude oil.

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