What About Higher Gas Bills and Gasoline Prices?

Global instability and controversial new tariffs are driving up gas and gasoline prices, impacting consumers and the broader economy. Fossil fuels like natural gas and gasoline are bought and sold on a global market, so geopolitical uncertainty can affect their cost. We saw that with Russia’s invasion of Ukraine when global fuel prices spiked.

The recent tariffs announced by President Trump have also increased the cost of fossil gas and gasoline, much of which is imported from countries like Canada and Mexico. Tariffs on Canadian energy are expected to increase gasoline prices in the Midwest by up to 50 cents per gallon. While Americans who use electric heat pumps for heating or electric vehicles for transportation are less exposed to volatile fossil fuel prices, higher fuel prices also lead to higher prices for any goods or services that require energy to make or transport.

What Can States Do to Lower Energy Bills?

Not all energy bills are made equal. What you end up paying each month in your electricity bill largely depends on the decisions your state makes on where and how it gets energy, whether it has invested in energy efficient buildings, or how dramatically climate change has affected your part of the country. In other words, local policy matters when understanding your energy costs. 

What do the states with the lowest prices have in common? According to a 2024 report by the nonpartisan think tank Energy Innovation, many of the places that have seen the lowest energy bill increases since 2010 are states that have built large amounts of clean energy. States like Iowa, Kansas, New Mexico, and Oklahoma that have built the most cheap wind and solar energy (PDF) have actually seen energy prices increase less than overall inflation.

Which states have the highest energy bills? It turns out that the states most reliant on gas for electricity have been exposed the most to higher fuel costs and volatile fossil fuel prices. States that have lots of aging coal plants have also sunk large amounts of money in keeping these expensive plants online. The other common denominator of high-energy cost states is extreme weather: States like California, where wildfires put grid infrastructure at risk and create financial liability, have seen bills go up more than average.

States that have more energy-efficient buildings and efficiency requirements usually see lower energy bills. Even with higher prices, if you are using less electricity then you will be less affected by energy price spikes.

How Do I Lower My Bills? Hint: Cheap, Clean Energy.

There are several lessons to be learned from the states that have kept prices down. The first lesson is that building cheap, clean energy keeps bills down. Clean energy is cheaper than fossil energy. Wind and solar are the two cheapest forms of electricity around (PDF), and states and utilities that build them can also take advantage of a federal tax credit that cuts their cost 30 percent. Even without tax credits, new wind and solar projects are about half the price of new natural gas power.

Wind turbines and solar panels can also be built faster than large fossil fuel power plants. Electricity demand is increasing every year, especially with the growth of AI data centers. So if energy supply doesn’t keep up with energy demand, we’ll see higher average prices. We’re already seeing these increases in places like the Mid-Atlantic that have not built much clean energy. Thirteen Mid-Atlantic and Midwest states are about to see up to a 30 percent increase in power prices. Wind and solar projects are usually smaller and are made of modular parts like panels and blades that can be mass-manufactured. Meanwhile, gas plants require much larger construction efforts and are subject to shortages of turbines and a supply chain backed up until the 2030s.

You can also reduce your individual energy bill by installing rooftop solar panels, meaning you need to buy much less power from your utility. Though potentially expensive up front, rooftop solar (and accompanying batteries) can also take advantage of the 30 percent discount from federal tax credits.

Energy efficiency and electrification also help. Better insulation in your home means that you need less energy to keep it cool or warm. Buying more efficient appliances can reduce your energy needs. Electric heat pumps and heat pump water heaters are also much more efficient than traditional heaters, air conditioners, and hot water heaters powered by gas or fuel oil. Electric and hybrid vehicles are much more efficient than gasoline cars and have much lower lifetime fuel costs.