skip to Main Content

Tax Cuts in the Form of Energy Savings

Gasoline and natural gas prices have trended downward to kick off the summer, which we believe has helped to serve as a mini stimulus to the U.S. economy. It might help to take a closer look at some of the underlying data to get a better sense of what “energy” truly means to the consumer. J.P. Morgan Asset Management recently published data on energy spending by income level, which we found to be informative. The study showed that the lowest 40% of income earners (i.e., those who could use a break in their budgets the most) spend approximately 17.6% of their annual after-tax income on energy. Of that slice of the budget pie, while a marginal amount goes towards natural gas, the bulk of the dollars are split evenly between gasoline and electricity.

While the geopolitical issues that surround gasoline capture most of the headlines, electricity pricing can be an interesting animal all its own. The pricing of electricity is largely tied to natural gas since natural gas is one of the primary inputs into the electricity production process. Natural gas prices have come down considerably over the last year as discoveries of new natural gas sources and improved extraction and capture technologies have worked in tandem with lighter than expected consumer demand. The drop in natural gas pricing has carried over to electricity rates, reducing them from $71.79/mwh to $45.83/mwh during the 12-month period ending June 30, 2012(source: Bloomberg). A decrease of that magnitude can have a pretty significant impact on consumer pocketbooks.

Here at RegentAtlantic, we like to have a solid understanding of what drives both our clients’ everyday spending as well as the overall economy. Energy prices, including both gasoline and natural gas, play a role in both and may serve as positive charges to the economy when their respective prices fall.

 

Important Disclosure Information

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This article is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

Back To Top