Hydraulic fracturing (fracking) has created a natural gas boom in shale plays in the United States that has lowered prices, creating billions of dollars of retail savings for U.S. energy consumers, particularly among low-income households where energy amounts to a larger portion of monthly budgets, according to an analysis by Colorado-based Mercator Energy.
Based on its analysis of U.S. Energy Information Administration data covering the last 10 years, Mercator said that there were savings on natural gas related to electricity and heating bills for all U.S. consumers of $110 billion in 2012, and $32 billion of that total went to residential consumers, a third of which are eligible for low-income energy bill-paying assistance from existing government programs.
“Low natural gas prices will significantly advance the U.S. public health and welfare,” said Mercator president John Harpole.
Mercator’s work was cited in a Wall Street Journal editorial the past weekend, calling fracking a better source of energy bill-paying relief than the federal Low-Income Heating Energy Assistance Program (LIHEAP). While LIHEAP provided roughly $3.5 billion to low-income households in 2012, the savings for these same households from fracking totaled more than $10 billion, according to the Journal‘s calculations.
The analysis of today’s shale-driven low gas prices on U.S. residential households was part of a global analysis of fracking’s overall impacts by Harpole, a one-time gas purchasing manager for General Electric. He delivered the results of the analysis at this year’s National Energy and Utilities Affordability Conference.
Harpole cited the latest calculations from the U.S. Potential Gas Committee, noting that future gas supplies have increased by 25% in the past two years, stretching to the 2,688 Tcf level.
Driven by an acceleration of productivity gains in horizontal drilling and fracking, U.S. gas prices have stayed well below 2003-2008 levels — just before the shale boom really took off. Prices averaged more than $7/MMBtu in the five years through 2008, and about $2.80/MMBtu since, although Harpole noted that prices this year have climbed up to a little past $3/MMBtu on average.
Harpole stressed that since fracking has unleashed surplus supplies, gas prices have decreased by more than 60%, and all the while North American shale reserves continue to skyrocket, now hitting 1,662 Tcf. Further, the macro economy has benefited with 9.2 million high-paying U.S. jobs now supported by the oil/gas sector, he said. “The U.S. oil/gas industry contributes $86 million a day in taxes, royalties and other fees — about $31 billion a year.”
In his conclusions, Harpole challenged environmental critics and other vocal opponents of fracking to stop “demonizing” the oil/gas industry. He contends that fracking actually contributes substantial environmental, economic and social welfare advantages. Since 1949, 1.4 million wells have been fracked in the United States, and “no one has ever been able to demonstrate that it is harmful to human health,” he said.
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