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  • Rough Marginal Costs

    April 6th, 2014
    money  [html]
    We pay for most things directly as we use them: to park at a meter you put in quarters; to rent an apartment you send a check each month. For some things, however, our usage is metered and we pay after the fact: electricity, gas, water. In these cases we're often not well calibrated for marginal cost, which means we're not in a good position to make tradeoffs. Can I leave the fan on all night? Should I worry about letting this frozen food thaw in the fridge before I put it in the oven? How much should I be trying to take shorter showers? Colder ones?

    I thought it would be useful to compile some rough costs of these pay-later activities:

    Gas Oven one hour $0.16 [1]
    Gas Dryer one load $0.35 [2]
    Front Loading Washer, Warm one load $0.39 [3]
    Cold Shower ten minutes $0.57 [4]
    Hot Shower ten minutes $0.76 [5]
    Dishwasher one load $0.31 [6]
    Microwave two minutes $0.01 [7]
    Box Fan overnight $0.17 [8]

    This is based on a marginal cost of electricity of $0.21/kWh, natural gas of $1.40/therm, and water of $0.017/gallon which includes the sewer charge. [9] These come from our current bills in Medford MA; it's probably cheaper in lower cost of living states.

    While these are approximately in line with what I'd thought, I do see two changes I should make:

    • Be willing to use the dryer when line drying is inconvenient. (Previously I never used the dryer, for cost reasons.)
    • A long cold shower (in summer) is actually more expensive than a short hot one.


    [1] Gas Oven, 0.112 therms per hour.

    [2] Gas Dryer, 0.21kWh to spin the drum and 0.22 therms to heat the clothes.

    [3] Front Loader, 0.26kWH to run the machine, 0.064 therms for the water heater to heat the incoming water, 14.7 gallons of water.

    [4] Cold Shower, 3 gallons per minute, 30 gallons total, $0.57 for the water.

    [5] Hot Shower, 0.00014 therms per gallon per degree F. Ground water at around 55F, shower water at around 100F, so a 45F rise. Shower flow of about 3 gallons per minute. So over ten minutes that's thirty gallons each heated 45F. So $0.57 for the water [4] and $0.19 to heat it.

    [6] Dishwasher, 4 gallons of hot water and 1kWh to run the machine. That's $0.10 for the water and heating [5] and $0.21 for the electricity.

    [7] Microwave, 0.024 kWh per minute.

    [8] Box Fan,100W.

    [9] This is much higher than I'd thought, 10x the cost of desalination.

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