The Federal Reserve Bank of Cleveland said soaring natural gas production in the Appalachian Basin from 2009-2013 and the corresponding drop in prices have provided notable economic benefits for the region.

One of 12 reserve banks in the federal system, the Cleveland Fed serves the fourth district, which comprises Ohio, western Pennsylvania, West Virginia’s northern panhandle and eastern Kentucky. In examining the region’s trends in energy production and prices, the bank’s researchers found that while Appalachian and national coal production and prices were down from 2009-2013, utilities customers did not see savings in their electricity rates, which have changed only slightly since 2009 and were up nationwide 2-6% each month in 2014 when compared with 2013.

In contrast, while the basin accounts for more than one-quarter of the country’s coal production, it also now accounts for more than 25% of the nation’s gas production. The Fed researchers found that as gas production more than doubled in Ohio, West Virginia and Pennsylvania during the period studied, industrial and residential gas customers in those states saw mixed benefits.

“Some of these movements in production and prices have the potential to benefit various sectors of the Fourth District economy,” the researchers wrote. “We would expect movements in natural gas, oil and coal prices to impact households through multiple channels including electric and natural gas bills and gasoline prices at the pump. However, residential natural gas prices have not followed the same down-up, up-down trend seen in the wholesale price.”

Rather, households nationwide experienced gas price declines between 2009 and 2013, particularly in Ohio and Pennsylvania, the researchers said. Nationally, residential prices during the peak heating season declined by 19% from $11.02/Mcf to $8.93/Mcf. In Ohio, they fell 35% over the four years, going from about $10.00/Mcf to $6.50/Mcf. In Pennsylvania, they were down 25% from $14.00/Mcf in 2009 to about $10.50/Mcf in 2013, according to the bank.

Despite declines in Pennsylvania, since 2007, the price of gas delivered to residential customers in the state has been consistently higher than that for the United States as a whole. In non-winter months, the price premium has tended to be more severe, with Pennsylvania prices averaging 18.2% higher versus those across the United States, according to data compiled by NGI. In December, the Pennsylvania Public Utility Commission approved an order directing its Office of Competitive Market Oversight to go ahead with a long-awaited investigation into the state’s retail gas market that is to explore competition and potentially modernize regulations as shale gas production grows (see Daily GPI, Dec. 22, 2014) .

The researchers also found that while Industrial customers have seen declining gas prices in Ohio, prices in Pennsylvania increased. The average price last year in Ohio was 25% lower than the average during 2009. Over the same time in Pennsylvania, the average industrial price was 2% higher.

Researchers noted that fuel-switching for power needs could have a benefit for the region and the country if gas continues to displace coal for electricity generation. The researchers found that between 2009 and 2014 the megawatts generated by coal dropped by 8.6%, while the megawatts generated by gas increased 21%.

“If this substitution is driven by technological improvements in drilling that have made natural gas less expensive to extract, the savings should eventually appear in electricity rates,” researchers wrote.