Improving the energy sector to help American family budgets

Over the past three years, Americans have suffered from high and rising prices of necessary goods. The consumer price index rose by 17.7 percent from the beginning of 2021 to the end of 2023. For many Americans, wages did not keep pace with inflation and they were left struggling to pay their bills. A large portion of all inflation was due to a significant rise in the price of energy. The decisions of our lawmakers can either lead America towards a future of affordable, abundant energy or one with persistent energy inflation.

Poorer Americans are particularly harmed by energy inflation. Research from the American Council for an Energy-Efficient Economy found that U.S. households spend on average 5.6 percent of their income on electricity and fuel. In contrast, low-income households spend on average 17.8 percent of their income on energy. Energy policy that increases the cost of energy will disproportionately harm the poor and reduce their quality of life. These issues are compounded for lower income rural Americans who have fewer transit options and often need to drive longer distances to purchase goods or receive access to services. Policies that lower the cost of energy reduce the cost of living and create new opportunities for Americans.

The cost of energy is essential not only to the prosperity of American households but also to the success of American companies. The United States can improve its competitiveness by pursuing policies that lower the price of electricity and encourage investment in critical energy infrastructure. Many of the cutting-edge industries from semiconductors to artificial intelligence to aerospace engineering require access to reliable heat and electricity at a competitive price.

In my chapter for the Club for Growth Foundation’s Policy Handbook, I analyzed and proposed a number of policies that would help to reduce the cost of electricity for consumers and increase the competitiveness of American industry:

• Streamline the permitting process for offshore oil and gas leases and require at least four lease sales per year
• Expand the range of activities classified as categorical exclusions under the National Environmental Policy Act (NEPA), thereby exempting them from full environmental review
• Amend the 2015 Fixing America’s Surface Transportation Act to include mining as a covered activity
• Designate uranium as a critical mineral

Several of the other provisions analyzed in the paper have since become law. President Biden recently signed the Fire Safety and Grants Act of 2023, which included the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act of 2024 (ADVANCE Act). The ADVANCE Act will encourage further investment in new nuclear energy by reducing the cost of getting a new reactor design approved, establishing prizes for first-of-a-kind reactor licensing and operation, and regulatory changes that facilitate converting old coal plants into nuclear plants. Additionally, the law gave the Nuclear Regulatory Commission additional resources and a new mandate to better align its mission with the needs of the American people.

The success of bipartisan reform, like the ADVANCE Act, shows that economic stagnation is not inevitable but a policy choice. The real barrier to the growth of America’s energy supply and industrial competitiveness is excessive regulation. As I stated in the chapter:

“The United States has the natural resources, financial capital, and human talent to create a future of affordable, dependable, and abundant energy. Entrepreneurs and engineers have repeatedly proven themselves capable of solving the tough technical and business problems necessary to drive down the cost of energy, increase the competitiveness of American manufacturing, and significantly improve the quality of life for all Americans. The federal government needs to get out of the way.” 

Congress should continue to pursue bipartisan regulatory reform to lower the cost of electricity, improve the competitiveness of American industry, and liberate American families from energy inflation.

You can read the full chapter here.