Are Energy Prices Actually Going Down? My Attempt to Make Sense of It
My electricity bill last January was $287. I stared at it long enough that the numbers stopped looking real. This January it was $241. Progress? Maybe. Or maybe I just ran the space heater less. The point is, “are energy prices going down” sounds like it should have a simple answer and it absolutely does not.
I spent a few weeks trying to understand what actually drives energy pricing, partly out of curiosity and partly because I was tired of having no idea whether my bills were going up, down, or sideways. Here’s what I found.
The Short Answer
It depends on where you live, what type of energy you use, and when you’re asking. Natural gas prices in the US dropped significantly through 2023-2024 because domestic production hit record levels and a couple of mild winters reduced heating demand. Electricity prices have been more stubborn — they’ve come down in some regions but continued rising in others.
Gasoline fell from the peaks of 2022 but hasn’t returned to pre-2021 levels in most places. If your benchmark for “going down” is “cheaper than the COVID era,” then no. If it’s “cheaper than mid-2022 when gas was $5/gallon,” then yes.
What Actually Moves Energy Prices
Supply and demand is the obvious one but it matters more than people realize. The US is now the world’s largest oil and natural gas producer. That domestic production is a big reason gas prices here are lower than in Europe or Asia. When production increases faster than demand, prices fall. When demand spikes (hot summer, cold winter, economic boom) and supply can’t keep up, prices rise.
Geopolitics is the wildcard. Russia’s invasion of Ukraine in 2022 sent European energy prices into orbit because Europe depended heavily on Russian natural gas. The ripple effects hit global markets — oil, gas, and electricity prices spiked worldwide. Things have stabilized since then, but the underlying vulnerability hasn’t gone away. One bad crisis in the Middle East, one pipeline disruption, and prices can jump overnight.
OPEC decisions still matter for oil. The cartel can cut production to prop up prices or increase it to bring them down. They’ve been managing supply carefully, which has kept oil prices in a range that’s lower than the 2022 peak but higher than the 2019 baseline. OPEC doesn’t control everything, but they control enough to matter.
Weather is underrated as a price driver. A cold winter burns through natural gas reserves for heating. A hot summer spikes electricity demand for air conditioning. The 2023-2024 winter was relatively mild in most of the US, which helped keep natural gas prices low. A brutal winter could reverse that quickly.
The Renewable Energy Effect
This is the genuinely positive long-term trend. Solar panel costs have dropped roughly 90% since 2010. Wind energy is now cheaper than natural gas for new electricity generation in many regions. These aren’t projections or political talking points — they’re what energy companies are actually building because the economics work.
As more renewable capacity comes online, it puts downward pressure on wholesale electricity prices because the “fuel” (sunlight, wind) is free. The infrastructure isn’t free, obviously, but once installed the operating costs are minimal compared to burning gas or coal.
Battery storage is the piece that’s still catching up. Solar produces most of its energy midday, but demand peaks in the evening. Until storage gets cheap enough to bridge that gap reliably, natural gas plants will still be needed as backup, and their costs will still influence your electricity bill.
Why Your Bill Might Not Reflect Lower Prices
Here’s the frustrating part: even when wholesale energy costs drop, your utility bill doesn’t necessarily follow. There are layers between the commodity price and what you pay:
Grid maintenance and upgrades. Utilities are spending billions upgrading aging infrastructure, burying power lines for wildfire prevention, and building transmission for new renewable projects. Those costs get passed to ratepayers. In California, PG&E customers have seen rates increase even as the actual cost of generating electricity has decreased.
Delivery charges and fixed fees. A growing portion of your bill isn’t the energy itself — it’s the cost of delivering it to your house. Some utilities have increased fixed monthly charges, meaning even if you use less energy, your bill doesn’t drop proportionally.
Regulatory costs. Carbon pricing, renewable portfolio standards, and energy efficiency programs all add costs that get built into rates. These may have long-term benefits but they raise prices in the short term.
What You Can Actually Do
I realize “global energy markets” isn’t super actionable for someone staring at a $280 electricity bill. Here’s what’s worked for me:
I switched to a time-of-use rate plan and shifted heavy electricity use (laundry, dishwasher, EV charging) to off-peak hours. Saved roughly $30/month without changing my total consumption.
I got an energy audit through my utility (free) and discovered my attic insulation was embarrassingly thin. Adding insulation cost $1,200 and reduced my heating bills by about 15%.
I’m getting solar quotes right now. The economics look good in my area with current incentives, but the payback period is 7-9 years depending on the installer. Not a slam dunk, but probably worth it if I’m staying in this house long term.
The Honest Outlook
Energy prices are probably trending downward in the medium to long term, driven by cheap renewables and abundant domestic fossil fuel production. But “trending downward” doesn’t mean “going down every month.” There will be spikes from weather events, geopolitical crises, and infrastructure costs. Your specific bill depends on where you live, your utility’s cost structure, and how much you can control your own consumption.
The days of $5 gasoline and panic about heating bills are probably behind us for now. But the idea that energy is going to get consistently and dramatically cheaper? That’s optimistic. More realistic: energy costs will be less volatile and gradually decline as renewables scale up, but don’t expect your utility bill to suddenly become trivial. It’ll just hopefully stop being shocking.
