SC Clean Energy Community

Section 2
How Fuel Prices Quietly Increase Electricity Bills

Most consumers assume electricity costs are tied only to local utilities.

In reality, electricity prices are heavily influenced by global energy markets.

In the United States electricity generation mix includes:

• Natural Gas – ~40%
• Coal – ~16%
• Nuclear – ~19%
• Renewables – growing share

Natural gas prices and oil prices move together because both fuels compete in global energy markets.

When oil rises:

Natural gas demand increases

LNG export markets tighten supply

Power generation costs increase

Utilities pass costs to customers

These cost adjustments appear on bills as:

• Fuel cost recovery charges
• Capacity charges
• Environmental compliance fees
• Transmission and grid modernization costs

Ratepayers often assume utilities absorb these costs.

In reality, regulated utilities recover nearly all fuel costs from customers.

Section 1
The Global Energy Shock Driving Utility Costs

Energy markets in early 2026 have entered a period of extreme volatility.

Recent geopolitical conflict has disrupted energy shipping routes, particularly the Strait of Hormuz, through which roughly 20% of global oil shipments normally pass.

As a result:

• Oil markets surged above $100 per barrel briefly
• Energy supply chains experienced shipping delays
• Global inflation expectations increased

Even after short-term corrections, crude oil remains roughly 25–35% above pre-conflict levels.

Energy economists call this a “geopolitical risk premium.”

This premium is effectively embedded into electricity generation costs.

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