A new report prepared by Kleinhenz & Associates for the Ohio Oil and Gas Energy Education Program shows increased oil and natural gas production from hydraulic fracturing (“fracking”) has saved American consumers $1.1 trillion in the decade from 2008 to 2018. This breaks down to more than $900 in annual savings to each American family, or $9,000 in cumulative savings.
These savings come from the lower cost of natural gas due to increased production. According to the report, “natural gas as measured using the average Henry Hub price has declined from a 2008 high of $8.86 to an estimated 2018 price of $3.16.” For households in the lowest economic quintile, the bottom 20 percent, the lower price for natural gas amounts to a savings of 2.7 percent of their annual income. “This is equivalent to a raise of 2.7% for the poorest households,” the report states.
The paper singles out the states of the “Shale Crescent”—Ohio, Pennsylvania, and West Virginia—noting they are “responsible for 85 percent of the net growth in natural gas daily production over the past ten years and now [account] for nearly one-third of U.S. natural gas annual production.”
In these states, total savings since 2009 amount to almost $93 billion ($45 billion in Ohio, $43 billion in Pennsylvania, and $3 billion in West Virginia). For industrial and manufacturing end users in the region, savings were more than $25 billion ($13.9 billion in Ohio, $9.5 billion in Pennsylvania, $1.3 billion in West Virginia).
These findings are backed up by a series of reports from the Consumer Energy Alliance. The trade group found lower natural gas prices due to increased shale development led to more than $40 billion in savings for Ohio residents from 2006 to 2016. In Pennsylvania, savings were more than $30 billion. West Virginia residents experienced savings of more than $4 billion.
It should come as no surprise that shale development is spurring economic growth across the “Shale Crescent” and the United States as a whole. According to the Federal Reserve Bank of Dallas, the shale industry alone drove 10 percent of U.S. GDP from 2010 to 2015. In 2018, according to the National Bureau of Economic Research, oil and gas extraction accounted for $218 billion of U.S. economic output.
Hydraulic fracturing activity delivers $1,300 to $1,900 in annual benefits to local households, including “a 7 percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a 6 percent increase in housing prices,” according to a December 2016 study conducted by researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology.
Not only are we creating good paying jobs and achieving energy independence, but we aren’t held hostage to OPEC. We can (and are) threatening Russia’s economy with our cheap and abundant energy.
All of this is hated by the left.