I have been analysing Minnesota’s energy affordability all summer long so far, but separately as either electricity or natural gas. Let’s now look at these side-by-side, using the Consumer Price Index (CPI) as published by the US Bureau of Labor Statistics (BLS). Spoiler alert: energy affordability is looking miserable for Minnesota; electricity, more so than natural gas, so far.
Energy affordability
The first chart below presents three types of CPI: all items; electricity; and natural gas. The base of 1982-84 was set to 100 by BLS. Note that 2002 is the key year, as both electricity and natural gas consistently inflate from then. This is no surprise given that wind and solar promotion policies in Minnesota, and the Twin Cities, get going from 2001 onwards.
Highlights from this chart, for 2002 to 2024, include:
- all items CPI inflation of 67%, from 180 to 300 index points, and volatility of 34;
- electricity CPI inflation of 131%, from 139 to 321 index points, and volatility of 53;
- natural gas CPI inflation of 60%, from 113 to 181 index points, and volatility of 32.
Note that, according to Google AI:
“Standard deviation measures how far numbers sit from their average value [i.e. volatility]. It looks at the whole set over time, not just the biggest peak or the smallest drop. Big swings on a chart can have a low standard deviation if those large changes happen very rarely over a long time, while small values have a high standard deviation if the data bounces up and down constantly and rapidly around the average line.”
Electricity affordability
The second chart below compares electricity CPI for the Twin Cities of Minneapolis St Paul (MSP) to the Midwest (MW) region and the US country as a whole. According to the BLS, the MW consists of the ‘Big Ten’ states of Ohio, Michigan, Indiana, Illinois, Wisconsin, Iowa, Minnesota, North Dakota, South Dakota and Nebraska.
Highlights from this chart, for 2002 to 2024, include:
- MSP electricity CPI inflation of 131%, from 139 to 321 index points, and volatility of 53;
- MW electricity CPI inflation of 92%, from 126 to 241 index points, and volatility of 34;
- US electricity CPI inflation of 105%, from 136 to 279 index points, and volatility of 37.
Natural gas affordability
The third chart below compares natural gas CPI for MSP to the MW and the US.
Highlights from this chart, for 2002 to 2024, include:
- MSP natural gas CPI inflation of 60%, from 113 to 181 index points, and volatility of 32;
- MW natural gas CPI inflation of 50%, from 127 to 190 index points, and volatility of 33;
- US natural gas CPI inflation of 70%, from 135 to 230 index points, and volatility of 30.
Electricity vs natural gas
To summarise the inflation highlights from the second and third charts above, for 2002 to 2024:
- MSP electricity inflation = 131%, natural gas inflation = 60%, energy inflation = 191%;
- MW electricity inflation = 92%, natural gas inflation = 50%, energy inflation = 142%;
- US electricity inflation = 105%, natural gas inflation = 70%, energy inflation = 175%.
To summarise the volatility highlights from those same two charts, for 2002 to 2024:
- MSP electricity volatility = 53, natural gas volatility = 32, energy volatility = 85;
- MW electricity inflation = 34, natural gas volatility = 33, energy volatility = 67;
- US electricity volatility = 37, natural gas volatility = 30, energy volatility = 67.
Energy misery
A revealing way to summarise and compare the highlights from the three charts above is to take a Misery Index (MI) approach. The original MI is easily calculated as the inflation rate (usually CPI) plus the unemployment rate, but expressed as a percentage change not as an index number. Given that inflation and unemployment are each bad in themselves, a large and increasing MI is even worse. Zero, or negative due to deflation, would be the ideal.
Given that inflation and volatility are each bad in themselves, a large and increasing energy misery index (EMI) is really bad. Zero, or negative, would be the ideal. The following EMI data for energy inflation plus volatility is expressed as an index number, not a percentage change:
- MSP EMI = 335, given electricity = 235 and natural gas = 100;
- MW EMI = 246, given electricity = 150 and natural gas = 96;
- US EMI = 305, given electricity = 180 and natural gas = 125.
Conclusion
Minnesota energy affordability, as represented by the Twin Cities, has been miserable from 2002 to 2024. More miserable than the country by a factor of 110%, and far more than the region by 136%. And, electricity inflation and volatility have been the senior partners, to those of natural gas, in driving 21st century energy affordability misery in the North Star State.