University of Michigan Energy Survey
Results through January 2014
John DeCicco, Diego Horna Munoz and Lisa Neidert
University of Michigan
Energy Institute and
Institute for Social Research
June 2014
www.energy.umich.edu
www.home.isr.umich.edu
Table of Contents
Introduction
1
Degree of Concern about Energy-Related Issues
1
Intensity of concern
3
Views on Energy Reliability
4
Views of Energy Affordability
5
Expected change in home energy bills
7
The affordability of gasoline
9
Gasoline price expectations
11
Views on Energy and the Environment
11
Sources of energy believed to most affect the environment
12
Expectations regarding the impact of energy on the environment
12
Conclusion
13
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University of Michigan Energy Survey
Results through January 2014
Introduction
Energy is a major issue that affects consumer well-being, the environment and the economy.
Building on the university's long-running Surveys of Consumers (SCA),1 the University of
Michigan Energy Survey gauges American consumers' attitudes about major energy-related
concerns including affordability, reliability and impact on the environment. The Energy Survey
runs quarterly as an 18-question rider on the SCA in January, April, July and October of each
year; it first ran in October 2013. This report covers data through the second sample, taken in
January 2014, and presents both comparative and combined results from these first two samples.
Further background on the design and methodology of the U-M Energy Survey can be found in
the initial report.2
The new data confirm the key findings from the initial survey, including consumers'
relatively high degree of concern about the impact of energy on the environment and the greater
concern they express about increases in gasoline prices than about increases in home energy
bills. A number of other findings remain consistent across the two samples and their significance
is therefore strengthened in the pooled sample that combines October 2013 and January 2014
data. We find a hint of seasonal and energy price volatility effects that may reflect the higher
prices experienced for some fuels and some regions over the winter. Thus, for some results, we
are finding greater statistical power while other analyses are only suggestive at this point and
must await additional data.
Degree of Concern about Energy-Related Issues
The January 2014 survey confirms one of the most notable findings from the October 2013
survey, namely, that respondents are at least as concerned about the effect of energy on the
environment as they are about the affordability of energy. In fact, as seen in Figure 1, with the
combined sample the 58% share of those who expressed a fair amount or great deal of concern
about the impact of energy on the environment statistically edges out the 53% share who
1
Figure 1. American consumers' energy-related concerns
expressed similar degrees of concern about affordability. Respondents were relatively less
concerned about reliability. Figure 1 also illustrates the similarity in responses across the two
surveys. No statistically significant differences in the results are apparent between the October
and January data, and the combined sample strengthens the significance of the findings. The
shares of consumers who worry about the affordability and environmental impact of energy are
significantly greater than the roughly 30% share who worry about reliability.
This result is based on a series of questions that ask respondents about their degrees of
concern about these three energy-related issues:
How much do you personally worry about the reliability of energy? Would you say a great deal, a
fair amount, only a little, or not at all?
How much do you personally worry about the affordability of energy? Would you say a great
deal, a fair amount, only a little, or not at all?
How much do you personally worry about the environmental impact of energy? Would you say a
great deal, a fair amount, only a little, or not at all?
These questions were posed near the end of the interview so that the respondents had already
become familiar with the aspects of energy being addressed. To measure these attitudes, we used
a balanced four-level scale as described in the adjoining box.
2
The U-M Energy Survey has several
Why a 4-point scale?
classification variables including self-reported
household income, home status (rent vs. own with
home owners' self-reported home value), geographic
region and self-reported knowledge of energy. We
found that the respondents' degrees of concern about
the reliability and affordability of energy varied
according to income bracket, but that the degree of
concern about the impact of energy on the
environment did not.
Regarding energy reliability, respondents in
In selecting a measurement scale for questions
about degree of concern, a first decision was
whether to use a bipolar or unipolar scale. Our
cognitive interviews indicated that a bipolar scale
confused respondents, who had difficulty seeing
the choices in such black-and-white terms (as in
an "agree" vs. "disagree" question). We therefore
adopted a unipolar approach, to assess degrees
along a continuum of concern.
Although the literature suggests that the optimal
length for a unipolar scale involves 5 gradations,
for our questions we felt that it would not be
meaningful to have a midpoint (e.g., "neither
affordable nor unaffordable"). We therefore
adopted a balanced 4-point scale without a
neutral midpoint.
the top tercile of self-reported household income are significantly less concerned than those in
the bottom tercile. In the case of energy affordability, those in the income top tercile are
significantly less concerned about this than those in the middle and bottom terciles.
Our samples to date both suggest that consumers' degree of concern about the impact of
energy on the environment does not vary by income, home status, region or self-reported
knowledge of energy. The share of respondents that worry a great deal or a fair amount about
this aspect of energy is close to 60% across all of these controls.
Intensity of concern
As shown in Figure 1, collapsing the four response choices into two (a great deal or a fair
amount versus only a little or not at all) indicates similar overall levels of concern about the
affordability of energy and its impact on the environment, with the environmental concern
showing a slight edge in the combined sample. However, if we look more closely at the
responses, is the intensity of concern similar for these two issues?
Table 1 shows the distribution of responses to the worry about questions for the
combined October 2013 and January 2014 samples. For examining this question, we define an
intensity of concern metric as the ratio of those who responded "a great deal" to the sum of those
who responded either "a great deal" or "a fair amount." A converse ratio can be defined for the
intensity of not worrying; these metrics are shown at the bottom of the table. This intensity of
concern metric shows that of those who expressed some degree of worry about affordability,
31% had “a great deal” of concern. Of those concerned about the impact of energy on the
3
Table 1.
Detailed responses to the Worry About questions for the
U-M Energy Survey combined sample, Oct 2013 and Jan 2014
The extent to which consumers worry about:
Response
Environmental
Impact of Energy
Affordability
of Energy
Reliability
of Energy
A great deal
A fair amount
Only a little
Not at all
22.6
35.8
29.6
12.0
16.5
36.7
35.6
11.2
9.4
20.6
38.3
31.7
A great deal/A fair amount
Only a little/Not at all
58.4
41.6
53.2
46.8
30.0
70.0
Intensity* of Worry
Intensity* of Not Worry
38.7
28.9
31.0
23.9
31.4
45.2
* Intensity is defined for Worry as [A great deal ÷ (A great deal + A fair amount)]
and for Not Worry as [Not at all ÷ (Not at all + Only a little)]
environment, 39% had the more intense degree of concern. For reliability the level of intensity
(31%) among those who worry about it is similar to the level of intensity for those concerned
about affordability, even though the overall level of concern about reliability is lower. Therefore,
it appears that concern about the impact of energy on the environment exhibits a higher degree of
intensity in addition to appearing slightly greater overall than concern about affordability.
Looking at the intensity of "not worrying," given in the last line of the table, shows that
the share of those who are relatively unconcerned who are in fact "not at all" worried about an
issue is highest (45%) for reliability. Regarding affordability and environmental impact, less than
30% of respondents said that they were not at all worried.
Views on Energy Reliability
Consumers were asked their views on the reliability of energy sources. They had the following
options: not at all reliable, slightly reliable, moderately reliable, or very reliable. They were also
asked to state what energy sources they were referring to when they referred to the reliability of
energy.
In January 2014, 70% of respondents consider the energy they use as very reliable; this is
not significantly different from the 75%, figure obtained from the October 2013 survey; the
combined sample yielded an average of roughly 72%. In the October 2013 survey, the views on
4
Figure 2. Consumer perceptions of energy reliability by income
energy reliability varied across home tenure and property value; however, these differences were
not significant in January 2014, although the differences followed the October 2013 pattern. On
the other hand, perceptions of energy reliability varied by tercile of self-reported income in both
the October 2013 and January 2014 data samples. For the combined sample, 75% - 80% of
consumers in the top two income terciles considered their energy to be very reliable while the
respective figure for the bottom tercile is only about 60% (Figure 2).
In this latest survey, electricity was the dominant response for the energy source
consumers were referring to, given by roughly 59% of consumers, while natural gas ranked
second at roughly 23% of respondents. They were followed by gasoline, oil and petroleum with
nearly 12%. The October 2013 survey yielded the same ordinal pattern. Similar to the October
2013 survey results, some regional variation was observed. However, the differences across
regions in this latest survey were not large enough to be significant.
Views of Energy Affordability
We asked consumers a series of questions about their most recent home energy bill, the types of
energy covered by the bill and the dollar amount at which they would consider the bill to become
unaffordable. Answers to these three questions allowed us to compute the percentage by which
energy bills would have to increase in order for them to be seen as unaffordable by consumers.
5
The January 2014 survey indicated that a home energy bill increase of 130% (by factor of 2.3) is
considered unaffordable. This value is significantly smaller than the roughly 170% increase that
was considered unaffordable based on responses to the October 2013 survey.
In both cases, the percent increases are relative to the energy costs experienced by the
respondents when the survey was taken. From October 2013 to January 2014, the average selfreported monthly energy bill rose by roughly 22%, from $170 to $208, an increase significant at
the 95% level (Figure 3). However, the respondents' average estimate of how high their energy
bills would need to be to become unaffordable did not increase significantly. Given the larger
variation in responses to such a question, the change in this estimate from $408 in October to
$428 in January is well below the level of significance. Therefore, the two samples (which had
no overlap) appear consistent in terms of the absolute level of home energy bills that consumers
consider unaffordable, which averages roughly $420 across the two samples.
Although the rise in costs reported in January could be consistent with a seasonal increase
in heating needs, at this point we cannot say whether consumers' views on the level of energy bill
considered to be unaffordable reflect seasonal influences. Weather and market factors can affect
costs; on the other hand, seasonal variations may be less salient for households enrolled in
“budget billing” plans designed to smooth out seasonal variability.
Figure 3. Consumers' monthly home energy bills: average self-reported current
bill and average bill level that is considered unaffordable
6
Figure 4. Percent increase in energy bill that would be unaffordable, by income
Differences in the home energy bill increase that consumers consider unaffordable were
again found across income categories and home status categories. Households in the top income
tercile believed that increasing their current energy bill by roughly a factor of 2.7 would make it
unaffordable, while households in the bottom and middle income terciles believe that a doubling
(roughly a factor of 2.0 increase) of energy bills would render it unaffordable. As seen in Figure
4, the mean increase in energy bills that would be considered unaffordable by households in the
bottom and top income terciles did not differ significantly between the October 2013 and January
2014 samples. However, the percentage energy bill increase reported to be unaffordable by
households in the middle income tercile decreased significantly, from an average of 160% based
on the October response down to roughly 98% for the January responses. A similar pattern holds
when comparing responses on this topic across home status categories.
The responses to this series of questions allows us to estimate the fraction of consumers
who deem their current home energy bill to be unaffordable. This fraction is equal to roughly 5%
and it has not varied significantly between the October 2013 survey and the January 2014 survey
or across region, income, home status or self-reported knowledge of energy.
Expected change in home energy bills
Consumers were also asked what they expect their energy bill to be five years from now. On
average, consumers expect that their home energy bills will increase by about 30%.
7
Figure 5. Energy bill increase expected five years from now by home tenure and
property value
In contrast to the October 2013 survey, the January 2014 responses did not reveal
significant differences across regions or income terciles. On the other hand, as seen with the
October 2013 data, we found significant differences by home tenure status and across selfreported property values. As seen in Figure 5, the energy bill increase expected within each
category did not differ significantly from October to January. The combined sample (shown by
the green bars) suggests that the energy bill increase expected by consumers in the middle and
top terciles by property value is significantly lower than the increase expected by renters. Also,
in contrast to the October 2013 sample (blue bars), when the expected energy bill increase was
essentially the same across home value terciles, the January 2014 sample finds bottom tercile
respondents expecting a higher rise in their home energy bills than respondents in the middle and
top terciles by property value.
Analyzing responses about the expected increase in home energy bills in combination
with those on the degree of increase considered unaffordable enables us to compute the share of
consumers who implicitly expect their energy bills to become unaffordable in five years. This
fraction averages roughly 20% overall. Cross-tabulating the January 2014 results by region again
reveals geographic variability, but as shown in Figure 6, the pattern differs from what was seen
in the October sample. The one statistically significant change is a notable jump in the number of
respondents in the Northeast who believe that their bills will become unaffordable in five years.
8
Figure 6. Fraction of U.S. consumers who expect their home energy bills to
become unaffordable in five years, by region
Nevertheless, the overall variability within and across the two samples is such that no regionally
significant pattern is apparent for the combined sample. We will have to wait for additional data
to see if significantly stable geographic differences emerge in the responses to the question about
the expected future affordability of home energy bills.
We again found significant differences in responses on this topic by income. The share of
households in the top income tercile who expect energy bill to become unaffordable in five years
is significantly smaller than the corresponding share in the bottom tercile. This pattern was
observed in the October 2013 survey, the January 2014 survey and combined results. We did not
find significant differences by home status in January 2014.
The affordability of gasoline
The U-M Energy Survey also asked consumers how high the price of gasoline would have to be
before they would find it unaffordable. If respondents could not answer in dollars, they were
asked the percentage increase and the answer was converted to dollars based on the national
average gasoline price of $3.39 per gallon in January 2014, when the survey was taken.3
On average, U.S. consumers believe that gasoline would become unaffordable if it
reached $5.96, which equates to an increase of 83% and does not differ significantly from the
$5.90 estimate based on the October 2013 survey. We found significant differences across
income terciles and across home tenure and property value terciles. As seen in the October
9
survey, the gasoline price that households in the top income tercile deemed unaffordable is
significantly higher than the price that the middle and bottom income terciles say would be
unaffordable (in the sense of requiring them to make significant changes in the way they travel).
In the January survey, top income tercile respondents on average believe that $6.75 per gallon
would be unaffordable, a threshold that is markedly higher than the roughly $5.50 per gallon
average price that is considered unaffordable by middle and bottom income tercile respondents.
A similar difference is seen between homeowners in the top tercile and those in the middle and
bottom terciles of self-reported property value.
By comparing the price at which gasoline would become unaffordable to the current price
of gasoline, we can compute the fraction of the population that implicitly considers gasoline to
already be unaffordable. This figure is quite small, about 3%, and did not differ significantly
across any of our classification variables.
Just as we saw in the initial U-M Energy Survey, consumers revealed that they would
tolerate a much higher increase in home energy bills than they can in gasoline prices before
viewing the cost as unaffordable. The average percent increases deemed unaffordable based on
the October 2013 and January 2014 data are shown in Figure 7. The gasoline price results are
essentially identical for the two samples, which found that an increase averaging 84% would be
seen as unaffordable. As discussed above in the section on home energy bills, the degree of
Figure 7. Degrees of increase in home energy bills and gasoline prices that
consumers consider to be unaffordable
10
increase considered unaffordable dropped in the January sample compared to the October
sample, a finding in line with the higher baseline energy bill (which increased from October to
January) and unchanged views of the absolute dollar level of home energy bills respondents felt
they could not afford. In short, consumers are consistently articulating a much greater sensitivity
to gasoline price hikes than to increases in home energy bills.
Gasoline price expectations
When asked how they thought gasoline prices to change over the next five years, January 2014
respondents reported an average expectation of $3.72 per gallon, a level 10% higher than the
$3.39 per gallon national average pump price that month. No significant variation in this
expectation was observed by region, income, home status or knowledge of energy.
Combining these responses with those on the gasoline price consumers would consider
unaffordable, we found that on average 12% of respondents implicitly expect gasoline to become
unaffordable in five years. This estimate is the same based on both the October 2013 and January
2014 surveys. Here we did find significant variations according to self-reported income and
home status. As expected, the roughly 5% share of top income households that expect gasoline to
become unaffordable is notably smaller than the 18% of those in the bottom income tercile who
felt it would be unaffordable in five years. Similar results are seen when segmenting the data by
the respondents' self-reported property values.
Views on Energy and the Environment
Consumers were asked the extent to which energy use in everyday life affects the environment
using a 4-point scale of not at all, a little, a fair amount or a lot. After answering this question,
they were asked to state which environmental domain they believe is affected the most: air,
water, global warming or personal health.4
According to the January 2014 survey responses, about three-quarters of consumers
believe that energy use affects the environment by at least a fair amount. This result is consistent
with the October 2013 survey and no significant differences were observed across regions,
income bracket, home status or self-reported knowledge of energy. As also seen in the October
results, air was viewed as the environmental domain mostly affected by energy use (46%),
followed by global warming (24%), and then personal health and water (both with 15%).
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Sources of energy believed to most affect the environment
Interviewers asked respondents which source of energy they thought affected the environment
the most, without prompting them about any specific source. Answers to this open-ended
question yielded the results listed in Table 2.
Table 2.
Responses to question about which source of energy
consumers believe affects the environment the most
Responses
percent
Responses
percent
Gasoline, oil or petroleum
36
Pollution
1.0
Coal
17
Power plants
1.0
Electricity
13
People, cities
0.9
Fossil fuels
8
Fracking
0.6
Natural gas
6
All
0.2
Emissions
3
Chemicals
0.2
Biofuels, wood
2
None
0.2
Water pollution
1.9
Solar/wind
0.2
Automobile exhaust
1.7
Electromagnetic fields
0.1
Factories
1.3
Hydroelectric dams
0.1
Nuclear
1.2
Don’t know / no answer
4
Source: U-M Energy Survey combined sample, Oct 2013 and Jan 2014
The distribution of responses was very similar across the two surveys. A majority (roughly twothirds) of respondents identified fossil-related forms of energy (gasoline and other petroleumrelated responses, coal, natural gas or generic "fossil fuels" responses) as those that most affect
the environment. Approximately 15% of respondents identified electricity or power plants. The
remaining answers included other items, including responses unrelated to fossil fuels or
electricity and in some cases items that are not sources of energy per se.
Expectations regarding the impact of energy on the environment
Consumers were asked whether they expected energy use in everyday life to affect the
environment more, less or about the same in the next five years. Roughly 86% of respondents
said that they expect the impact of energy on the environment to increase. We found no
significant differences when cross-tabulating this by region, income, home status or self-reported
knowledge of energy. The same pattern was observed in the October 2013 survey results.
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Conclusion
Data from the January 2014 U-M Energy Survey show that two key findings from the October
2013 data were confirmed: American consumers are at least as concerned about the impact of
energy on the environment as they are about its affordability; and consumers express much
greater concern about increases in gasoline prices than they do about their home energy bills.
Unsurprisingly for energy costs and affordability, the most well-off consumers (whether by selfreported income or by home value) are less concerned than consumers in the middle and bottom
two terciles. As far as reliability is concerned, it is the bottom tercile that stands out in terms of
worry in comparison to the middle and top terciles. Regarding the impact of energy on the
environment, it is notable that the relatively high degree of concern remains consistent across
income brackets as well as across other classification variables.
In summary, the most notable findings of the survey have held up with the second
sample. Further data will be needed to see whether other patterns (such as those that might be
related to regional or seasonal effects) emerge, which can only be detected with significance as
larger cumulative samples are obtained.
1
Thomson Reuters/University of Michigan Surveys of Consumers, http://www.sca.isr.umich.edu/
2
University of Michigan Energy Survey, initial report (March 2014).
http://energy.umich.edu/sites/default/files/UM%20Energy%20Survey%20Report%2019Mar%2714.pdf
3
U.S. Energy Information Administration. “Petroleum & Other Liquids – Weekly Retail Gasoline and
Diesel Prices,” accessed May 3, 2014. http://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_m.htm; all
prices are in current US$ as of January 2014.
4
See our initial report, op. cit., for an explanation of how this portion of the survey was designed.
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