Red-state voters spend more of their disposable income on energy than those in blue states, and this election year that has them seeing, well, red.
That’s among the conclusions of an analysis of energy and presidential politics done by Kevin Book, Managing Director of Research for ClearView Energy Partners in Washington, DC.
Book’s analysis shows electricity in states considered solid for President Barack Obama already costs on average about 15 cents per kilowatt-hour, half again as much as power in states firmly behind Republican presidential contender Mitt Romney.
But average incomes in the Democratic strongholds are also higher by more than $7,000, so energy spending represents a smaller proportion of disposable personal income in Obama-leaning states. That means consumers’ perceptions of their economic well-being and sensitivities to energy issues are substantially different.
Consumers in Romney-leaning states spent 2.5% more of their disposable income on energy in 2011, including spending just under 5% on gasoline while consumers in Obama-leaning states spent about 3.3%.
Not Just Driving
“Romney supporters drive more (and) have more greenhouse-gas-intensive heat and power,” said Book, in an analysis presented to the National Capital Area Chapter of the US Association of Energy Economists June 22. “Obama voters are economically better-positioned for a carbon price” and other changes stemming from environmental rules.
A key factor is the continuing coal dependency of Romney-leaning states. In those states seen as strongly supporting Romney or leaning that way, including nearly all the central and Mountain US, 50-60% of electric generating capacity is still coal-fired.
In the states strongest for Obama – New England and the mid-Atlantic coastal states, the West Coast, Illinois, Minnesota and Hawaii – only 17.2% of capacity is coal-fired.
Coal-dependent states will be disproportionately affected by a series of environmental regulations enacted during Obama’s term, including Greenhouse Gas (GHG) limits, the Mercury and Air Toxics (MATS) rule and the Cross State Air Pollution Rule (CSAPR).
The MATS rule in particular is being cited by generators as forcing shutdowns of older coal capacity that’s uneconomic to retrofit, and the GHG rules exclude building new coal plants without carbon capture and sequestration. That technology isn’t economically feasible yet at the scale needed.
Its Still the Economy…
Electricity rates are now low in those Romney-leaning coal-dependent states, but building replacement generation will raise those charges, often to consumers who can ill afford it.
Moreover, Book said, traditional energy activities like drilling, refining and pipelines that are a small share of the national economy are often crucial to an individual state’s economy, further affecting voter perceptions of a federal action.
For instance, the oil and gas activities that create 17.6% of Arkansas’ gross domestic product are only 0.06% of US GDP, Book said. Mining in Wyoming, the largest coal-producing state, forms nearly 11% of the state GDP but is just 0.03% of the federal GDP.
In Book’s analysis, states now considered toss-ups fall between the solid red and blue states on key indicators including coal vulnerability, incomes, and energy shares of disposable incomes.
