I recently watched a story on MSNBC about declines in the demand of electricity in several areas throughout the country. To follow-up, I found a more thorough article on msnbc.com that I feel explains the issue.
The article explains that, "Consumers and businesses may finally be seeing some relief from rising utility bills, thanks to the biggest decline in U.S. electricity demand in decades." This decline in demand is expected to last throughout the rest of 2009.
This really goes to show how severe the economic downturn has been for some families. In the past decade, increased electronic innovation and demand for these electronics (i.e., iPods, computers, video game consoles, etc.) has increased as well. It appears that to save money, people are cutting back on the use of their electronics. This trend began last year when power consumption decreased 1.9%.
This trend is interesting because according to many different studies, the own-price elasticity of demand for electricity is inelastic. This means that an electricity price increase of 1% results in less than a 1% change in demand for electricity. While the numbers aren't enough to convince that electricity is now an elastic good, it does pose the question: if pushed far enough, COULD electricity (and various other utilities) become elastic goods?
I know that I, personally, am taking care to save money in any way possible right now. I constantly find myself turning down the air-conditioning, or unplugging appliances that are not being used. I can only imaging what people who are under tighter money restrictions than I am are doing to save money.