The conflict in the Middle East has devastated the global energy industry.
Once the war in Iran began, the vast majority of the world was preparing for a substantial increase in the price of oil. But nobody would have expected things to get as bad as they are. And in one state, things have gotten even worse as March brought with it a new $5 charge.
How much has your electric bill increased this month?
How war has changed the energy industry over the last century
During the First World War, the role of energy became immensely important.
In 1917, the leader of France, Georges Clemenceau, told American President Woodrow Wilson that “gasoline is as vital as blood”. How right he turned out to be would have shocked him.
Oil-powered ships changed the battlefield as they produced no visible evidence, such as the smoke produced by coal-powered vessels.
The first generation of tanks, airplanes, and even flamethrowers all emerged from the need to develop mobile, oil-based warfare. During World War II, the role of oil in warfare became clear as it became a primary strategic feature.
The impact of war on the oil sector became abundantly clear during the 1973 “oil shock.” And not much has changed in that regard since.
The impact of the closing of the Strait of Hormuz has been profound
Once the war in Iran kicked off, the government of the Islamic Republic decided to close the Strait of Hormuz to any and all oil shipments.
This had an immediate impact on the price of oil per barrel and left nations scrambling to deploy their strategic petroleum reserves. Japan, and even we in America, have opted to deploy significant oil reserves to fill the gap left by the war.
The price of oil now sits well beyond the $100 per barrel mark and is only going to get more expensive as the war drags on.
While the advancement of the renewable energy industry has created a paradox for nations aiming to accelerate the energy transition away from oil. The clean energy sector has not reached its full potential yet.
Some nations have been testing new types of solar panels that feel more at home in the jungle than in our cities.
One US state has recently decided to make things a little more expensive and complicated, raising alarm bells for citizens statewide. The Michigan Public Service Commission is no stranger to controversy, but this decision may be a step too far for some.
Michiganders are in for a shock when the March electric bill rolls around
The Michigan Public Service Commission made a controversial decision in February that will affect millions around the iconic state.
It approved a $242.4 million rate increase for electricity across the board. Meaning that once we do the math, each homeowner can expect at least a $5 increase for their March electric bill.
The typical residential customer uses roughly 500 kWh per month, and due to the rate increase, can expect to pay roughly $4.93 more this month.
The global energy industry has spent the best part of the last few decades searching the planet and oceans for our next major energy resource, but with the war in Iran showing no signs of easing up, we might want to accelerate our search.
Why is the rate increase happening now
The rate increase officially went into effect on March 5th, and the state government has stated that the increase was necessary to gather funds for significant maintenance and modernization of the state grid.
Thanks to the rate increase in Michigan, the appeal of living off-grid has become too significant to ignore. How will the rate increase affect your monthly budget?
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