As mentioned a few times on here already I keep track of many… MANY things that go on in our life. When it comes to financial matters though I generally work off three main spreadsheets:
- Finances (for everyday financial tracking such as the mortgage and various account balances)
- Expenses (for current long term tracking of every expense we have)
- Investments (for tracking of current investments, future investment simulations and long term investment planning)
Today I thought many of you might be interested in a bit of a price check on the three key utilities and how they’ve varied (at least for us) over the past 4 years we’ve been living in this house. Now obviously all three utilities are going to be different for different houses, family types, locations and climates but for now just pay attention to the general change percentage not the specific amount.
From day one I’ve been recording not only our usage in each of the three utilities but also the daily surcharge rates, usage rates and basically everything else that’s on a typical bill so that I can track them and figure out how to best reduce them. So without further ado, here are the three main utilities and their price differences over the last four years (1st July 2009 to 1st July 2013) for our location.
$1.0192 -> $2.5970 per kL (26.34% annual rise)
Usage Rate: $0.62 -> $1.00 per day (12.7% annual rise)
$0.0126 -> $0.0175 per MJ (8.56% annual rise)
Usage Rate: $0.40-> $0.58 per day (9.73% annual rise)
$0.157 -> $0.318 per kWh (19.3% annual rise)
Usage Rate: $0.6091 -> $0.96 per day (12% annual rise)
Not Quite Inflation
Obviously Gas prices have remained the lowest over the past four years but even they don’t really meet the “standard” 3% inflation rate that most people make reference to. Water is the obvious big hike coming in at 26% annual inflation, the more annoying part of those bills though are the numerous parks, drainage and supply surcharges. A recent water bill of $280 was only made up of $35 worth of actual water use. If we were to reduce our already very low water usage to half it’d only knock $17.50 off the bill! As such we don’t really make much of an effort more than we already do to save water.
Generally inflation is due to the supply and demand of the money in circulation. If the government prints more money then the currency is worth less and you need more money to buy the same thing as before. The fact that most other things seem to be rising with inflation (and not at 26% annually) indicates that these increases aren’t due to inflation but to the service actually costing more to produce. To me this doesn’t really come as much of a surprise as it’s simply the consequence of peak oil (which occurred in about 2005) and the starting onset of climate change due to global warming.
Most people are aware of the effects of peak oil although most aren’t aware that it’s already happened. Either way an interesting twist on peak oil is that even though the more “normal” oil that is petroleum has indeed gone up substantially, this has been mildly offset by the use of other more unorthodox oil types such as gas, diesel and so on. Before a barrel of petrol might have cost $50 and so it was far cheaper to use this rather than digging up other more expensive types of oil. Now that a barrel costs more (say $100) we see that it’s now cheaper to dig up those other more exotic oils. Thus although we have reached peak oil for petroleum, we are still seeing “increases” due to the world now digging for other oil types. Of course, this doesn’t make oil any cheaper and as a result things like water, gas and electricity have gone up sharply. Funnily enough, as much as popular news pieces complain about the “increased costs of living” here in Australia I fear we haven’t seen anything yet. The real kicker that’s coming is climate change…
The Unseen Threat From Climate Change
Ask most people about climate change or global warming and few can even tell the difference between the two. For reference global warming is the warming of the Earth’s temperature due to trapped CO2 and other greenhouse gases not letting the Sun’s heat back out into space. As a result the Earth’s climate is changing due to these increased temperatures, thus causing climate change. Global warming is the warming of the whole Earth’s temperature (on average). Climate change is the result of that increased temperature change.
What most people will know is the old argument surrounding global warming, the one saying that the Earth will slowly get hotter and hotter causing all sorts of calamity such as melted ice sheets and hotter weather. The real result looks to be more akin to an amplification of our current weather patterns. Does your area get flooded once every 100 years? Well now it’ll get that same flood every 20 years. It also seems like all our previous estimates of how quickly the world will shift into its hotter climate have been blown away with things like the Arctic ice sheets converging into a death spiral that will likely see it all gone by the end of this decade. Surprisingly though this isn’t the threat I’m referring to (although it is a major one, people just seem to ignore it).
In fact the threat that is rearing its ugly head right now is the fact that solar panel systems in Australia are causing BIG troubles for our energy companies. We’re not using as much power as before (a good thing!) and the trend is still heading downwards instead of the progressive growth they’re used to. To add to that, the power we’re no longer using is smack bang in the centre of their maximum profit making zone. During the day when electricity is at “peak time rates” is where solar does its job best. As a result it’s destroying their entire business model and so far there are only 1,000,000 houses with solar. Reports say 1,000,000 more want it and will be getting it ASAP. Although this doesn’t sound like a “threat” I can’t see the results turning out well for us customers.
Even if the energy companies fail completely I’d bet that the government would simply bail them out using tax payer money, essentially making us all pay high electricity prices in the end. What’s probably going to happen though is what they’ve come to describe as the “spiral of death“. People use solar and cut out power companies profits (check). As a result the power companies increase their prices to compensate (check). This “encourages” more people to take up solar further cutting the power companies profits. As a result the…. you get the picture. Higher and higher go the prices and with the coming revolution of battery storage it’ll soon be quite economically possible to run your whole house on just solar panels and batteries. At that point the power companies are screwed (and so is the tax payer). I’m estimating around 5 years.
Now whilst this isn’t a direct result of climate change or the Earth’s temperature increasing the race to build cheap solar panels so that we may stop using fossil fuels was the starting point in the above scenario. From what I can see too, we will either be hit with higher and higher power rates (and just have to pay them) or we can all go to solar + batteries, have the power companies go bankrupt and then pay for them all through increased taxes. Great choice huh?