The Disproportionate Impacts of Energy
Costs on Lower-income and Minority
Families, 2008
American Coalition for Clean Coal Electricity (ACCCE)
Published March 2009

Study Objectives
1. Determine average family incomes for Hispanic, black and white
households using U.S. Census Bureau data.
2. Calculate energy costs by household income group, using U.S.
Department of Energy survey data and final energy price data for 2008.
3. Show the disproportionate impacts of high energy prices on all
lower-income households and on minority families.

Natural gas and gasoline have seen sharp increases in cost since 2005.
Price Trends of Consumer Energy
Products, 1990-2008
3.00
Electricity Nat'l Gas Gasoline
2.50
1990=1.00
2.00
1.50
1.00
0.50
0.00
1990 1995 2000 2005
Source: U.S. Department of Energy (residential electricity and natural gas, retail gasoline averages)

Increasing Energy Costs: Conclusions
• Energy prices have risen steadily for the past two decades, with the
sharpest increases over the past five years.
• Gasoline and residential natural gas have increased the most in
percentage terms: 172% and 135% since 1990, respectively.
• Residential electricity prices have increased just 44% since
1990, below the rate of inflation (67%).
• The use of low-cost domestic coal for more than 50% of electricity
generation has helped to keep electric prices low relative to other
energy sources.
• Recent energy price declines are likely temporary, tied to the global
economic recession.

Energy Price Impacts on Family Budgets
• Energy prices are squeezing family budgets for all Americans,
especially the 50% of households earning less than $50,000 annually.
– One-half of American families earned less than $50,000 in 2008.
• Minority families are disproportionately impacted by high energy
prices.
– 62% of Hispanic families and 66% of black families earn less than $50,000 annually,
compared to 48% of white households.

Energy costs for families earning less than $50,000 nearly doubled
between 2001 and 2008.
Electricity Other residential Gasoline
$7,000
$6,000
$4,281
$5,000
$4,000
$2,428
$2,406
$3,000
$2,000 $1,128
$790
$493
$1,000
$1,110
$806
$0
2001 2008
Source: U.S. Department of Energy

In 2008, energy costs consumed 20% of the after-tax incomes of
families earning less than $50,000 annually — up 11% from 2001.
30%
20%
20%
11%
10%
0%
2001 2008
Source: U.S. Department of Energy, U.S. Bureau of the Census

Energy costs comprised 52% of household incomes for families
earning less than $10,000 per year.
For families earning between 10,000 and $30,000 per year, energy
costs comprised 22% of household incomes.
52%
60%
50%
40%
22%
30%
20%
10%
0%
<$10K $10K-$30K
Source: U.S. Department of Energy, U.S. Bureau of the Census

Impact of Energy Costs: Conclusions
• Half of U.S. households spent 20% or more of their after-tax incomes
on energy.
• Poor families – those making less than $30,000 per year – spent nearly
one-quarter of their after-tax income on energy.
• The very poor – those making less than $10,000 per year – spent about
one-half of their incomes for energy. Some of these families received
government energy assistance.

2008 Energy Expenses for Minority
Families: A Closer Look

Average Annual Family Income, After Tax
$54,931
$65,000
$41,028
$55,000
$38,446
$45,000
$35,000
$25,000
$15,000
$5,000
-$5,000
Black Hispanic White
Source: U.S. Bureau of the Census

Average After-tax Incomes of Families
Earning less than $50,000
$21,864
$20,935
$25,000 $19,484
$20,000
$15,000
$10,000
$5,000
$0
Black Hispanic White
Source: U.S. Bureau of the Census

Percentage of Households Earning Less
Than $50,000 (pre-tax)
80% 66% 62%
48%
60%
40%
20%
0%
Black Hispanic White
Source: U.S. Bureau of the Census

Hispanic Families Earning less than $50,000
per Year: Post-Tax Income Spent on Energy
42%
50%
40%
30% 17% 16%
20%
10%
0%
<$10K $10-$30K $30-$50K
Source: U.S. Bureau of the Census, U.S. Department of Energy.

Black Families Earning less than $50,000 per
Year: Post-Tax Income Spent on Energy
56%
60%
50%
40% 23%
19%
30%
20%
10%
0%
<$10K $10-$30K $30-$50K
Source: U.S. Bureau of the Census, U.S. Department of Energy.

Impact of Energy Costs on Minority
Families: Conclusions
• 62% of Hispanic families and 66% of black families earn less than
$50,000 annually, compared to 48% of white households.
• The inequality of income distribution makes minority families
disproportionately vulnerable to energy price increases.
• In 2008, black and Hispanic families earning less than $30,000 annually
spent 27% and 23% of their after-tax incomes on energy.
– These costs thereby reduce their ability to pay for other necessities such as housing,
food, education and health care.

Looking Ahead
• 2008 marked an historic high for U.S. energy prices, driven by
unprecedented global oil demand and tight crude oil supplies.
• Gasoline prices have retreated from the $4.00 per gallon highs of last
summer, but are creeping back up and have not fallen as fast as
imported oil prices.
– Further increases are expected as the summer driving season approaches.
• Domestic coal is the only fuel projected to remain stable in price
due to ample supplies.
– As a result, the Department of Energy projects that electricity prices will increase by
only 4% from 2008 to 2010.
– Future price increases for oil and natural gas are virtually certain due to the higher
costs of finding and producing new petroleum supplies.
• Americans can prepare for the next round of energy price increases
by investing in more energy-efficient products and appliances, including
the next generation of \"plug-in\" electric vehicles.

Sourcing
Note: This study, which relies on data from the U.S.
Department of Energy and the U.S. Bureau of
the Census, was conducted by Gene Trisko, an
environmental attorney and energy economist
who represents labor and industry clients. He
previously served as an attorney in the Bureau of
Consumer Protection of the U.S. Federal Trade
Commission.

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