Inflation is eating your wallet. Energy efficiency helps you bite back. Don't wait.

The news that U.S. consumer prices have jumped 6.2% in the past year has the nation suddenly abuzz about the threat of inflation.

As our economy emerges from a global pandemic, the current run-up in prices has unique origins. It is clear, though, that one of the primary contributors to today’s rising prices is the soaring cost of fossil fuels, and consumers across America are feeling the pain at the pump and in our heating bills.

Americans probably do not need an extra reminder, but we paid an average of about $3.40 per gallon of gasoline in November, with the average household on track to spend about $480 (or 31%) more on gasoline this year than in 2020, according to the Energy Information Administration.

Home heating bills are likewise forecasted to jump this winter (by 30% for households that rely on natural gas, 43% for oil and 54% for propane).

Enduring inflation

Because gasoline and natural gas for heating and cooking are among the largest buckets of consumer spending (together accounting for over 3% of average spending), the very high increase in these energy commodities gives them a large impact on the household budget. At the high rates of increase we have seen in the past year, they would account for a quarter of the total increase in consumer prices.

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Many Americans have either forgotten or never known what it is like to endure meaningful inflation. After all, for many years, inflation remained even lower than the Federal Reserve's preferred 2% per year target.

When tough economic times arrive, however, they always serve to highlight the massive amount of waste that we otherwise ignore and allow to fester. Should this run-up in consumer prices continue into 2022 and beyond, increasing the efficiency of the products we use every day is one of the most effective tools at our disposal to push down fossil fuel expenses and protect the economic well-being of the American consumer.

Time to act

After all, economists have long known that investing in energy efficiency improvements has a positive impact on the broader economy. Now is precisely the time to act.

Take the humble light bulb for example. Swapping out just one light bulb from an incandescent to an LED reduces its energy usage by 75%, saving $40-$90 over a decade. This is a massive efficiency gain that can be reaped for the cost of a single cup of coffee. Yet, we continue to put up with weak and wasteful lighting efficiency standards that cost American consumers $300 million dollars in lost utility savings each month.

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Strong vehicle fuel efficiency standards are another massive opportunity. The cost of energy saving technologies are much lower than the amount of money saved on gasoline, quickly producing net savings that consumers can spend on other things. Recent years of federal inaction to improve the nation’s vehicle fleet are cold comfort to lower- and middle-income Americans now exposed to today’s high gasoline prices, so the Environmental Protection Agency and National Highway Traffic Safety Administration need to make up for lost time to provide consumers with the strongest possible standards moving forward. By our calculations, strengthening their proposed rule could save consumers an additional $28 billion.

Today’s spiking natural gas costs similarly highlight the impact of years of inaction on gas furnace and water heater efficiency standards.

Water and space heating represent by far the largest utility expenditure (often 50%, or more) of consumers’ home energy bills, yet the Department of Energy has failed to update these standards since 1987 for gas furnaces and 2010 for gas water heaters.

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A recent analysis found that strengthening both standards would save households $3 billion annually on their gas utility bills by 2035, and our own analysis shows that stronger appliance efficiency rules would particularly advantage low-income households.

As mounting inflationary pressures continue to make headlines, we need to remember we also have significantly underutilized tools at our disposal to shrink consumers’ bills. Energy efficiency upgrades are a no-regrets solution for protecting the American pocketbook. From our environment to our economy, the one thing we can no longer afford to waste is time.

Jack Gillis is executive director of the Consumer Federation of America, where he previously served as director of public affairs since 1983. In addition to being CFA’s CEO, Gillis serves as an advocate on issues relating to auto safety, auto buying, fuel efficiency and consumer protection.