Study Says Fracking is Saving Families $2,500 Annually, Significantly Lowering Greenhouse Gas Emissions

Research & Commentary by Tim Benson, The Heartland Institute

A report released in October 2019 by the White House Council of Economic Advisors (CEA) estimates increased oil and natural gas production from hydraulic fracturing  (“fracking”) saves American families $203 billion annually on gasoline and electricity bills. This breaks down to $2,500 in savings per family per year.

“From 2007 to 2019, innovation in shale production brought an eight-fold increase in extraction productivity for natural gas and a nineteen-fold increase for oil,” the report states. “These productivity gains have reduced costs and spurred production to record-breaking levels. As a result, the United States has become the world’s largest producer of both commodities, surpassing Russia in 2011 (for natural gas) and Saudi Arabia and Russia in 2018 (for oil). CEA estimates that greater productivity has reduced the domestic price of natural gas by 63 percent as of 2018 and led to a 45 percent decrease in the wholesale price of electricity. Shale production has also reduced the global price of oil by 10 percent as of 2019.”

Eighty percent of the $2,500 annual household savings comes from the reduction in price of natural gas, which has helped lower electricity costs by 45 percent since 2007. The other 20 percent of savings comes from lower costs for gasoline and heating fuels.  

For low-income families, who spend the largest share of their income on energy costs, these savings are very significant. For those families in the lowest income quintile, it represents a savings of 6.8 percent of their total income. For the highest income quintile, it still represents a 1.3 percent savings.

“In other words,” the report notes, “lower energy prices are like a progressive tax cut that helps the poorest households the most. The variation in savings stems heavily from differences in spending on electricity: according to the 2018 Consumer Expenditure Survey, the bottom 20 percent of households account for 8.6 percent of expenditures in general but 14.1 percent of electricity expenditures.”

However, these benefits aren’t spread out evenly among the states. The report notes states with anti-fracking and anti-fossil fuel agendas have actually increased costs for their residents. CEA specifically cites New York, which banned fracking and “stymied new pipeline construction.” According to CEA, “these policies have led to falling natural gas production in the State, greater reliance on energy produced elsewhere, and higher energy prices. New York’s failure to approve new pipelines causes consumers in New York and New England to pay an estimated $2 billion more in energy costs each year, or $233 for a family of four.”

The report also notes the positive effects the fracking revolution has had on the environment, estimating it lowered energy-related greenhouse gas (GHG) emissions by 527 million metric tons per year from 2005 to 2017. The represents 9 percent of 2005 GHG emission levels. “This contributed to a greater decline in GHG emissions (relative to the size of the economy) in the United States than in the European Union over the same period,” the report says. “The same is also true of particulate emissions, which have declined much more in the United States (57 percent) than in the European Union (41 percent) …  If policy makers had averted the shale revolution through a ban on hydraulic fracturing or other integral components to shale development, energy sector GHG emissions would most likely be higher today. Absent low natural gas prices, renewable electricity sources are unlikely to have enabled similar emissions reductions.”

“The shale revolution provides a striking example of the potential of private sector energy innovation and the resulting implications for consumers and the environment,” the report concludes. “In less than a decade, productivity in oil and gas extraction has increased several fold. As a result, production costs have fallen, making energy goods and services more affordable for consumers, especially lower-income households. By several measures, the shale revolution has led to greater environmental progress in the United States than in the European Union, which exercises more government control and has more stringent emissions policies.”

Fracking can ensure the United States remains the world’s largest energy producer. Policymakers should not put unnecessary and detrimental regulations on the natural gas and oil industries, which are safe, responsible, and have had an enormously positive impact on the economy.

The following documents provide more information about fracking and fossil fuels.

The Value of U.S. Energy Innovation and Policies Supporting the Shale Revolution

This report from the White House Council of Economic Advisors estimates that increased oil and natural gas production due to the fracking revolution is saving American families a combined $203 billion annually, or around $2,500 per family. On top of this, the fracking revolution is benefitting the environment, lowering energy-related greenhouse gas emissions by 527 million metric tons between 2005 and 2017.

Debunking Four Persistent Myths about Hydraulic Fracturing
This Heartland Institute Policy Brief by Policy Analyst Timothy Benson and former Heartland communications intern Linnea Lueken outlines the basic elements of the fracking process and then refutes the four most widespread fracking myths, providing lawmakers and the public with the research and data they need to make informed decisions about hydraulic fracturing.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Local Fiscal Effects of a Drilling Downturn: Local Government Impacts of Decreased Oil and Gas Activity in Five U.S. Shale Regions
This study from Resources for the Future finds 82 percent of communities in the five largest shale regions in the United States experienced a net fiscal benefit from hydraulic fracturing despite a large drop in oil and natural gas commodity prices starting in 2014.

Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

What If … Hydraulic Fracturing Was Banned?
This is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.

What If … America’s Energy Renaissance Never Happened?
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have ever been created and $548 billion in annual GDP would have been lost since 2009. The report also found electricity prices would be 31 percent higher and gasoline prices 43 percent higher.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers—summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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November 19, 2019 6:41 pm

That $200+ Billion per annum was supposed to be flowing into the pockets of Tom Steyer, George Soros, the Rockefeller Bros, and the rest of GreenSlimers, and all the Green Energy HedgeFund investors like CalPERS and CalSTRS for fat ROI’s to heal deep actuarial holes. All on the backs of the middle class.

The GreenSlime billionaires are mighty ticked-off that they aren’t getting that money. So ticked-off they are ready to spend at least $2Billion over the next 11 months on the US elections for Democrats.

$2Billion is a lot of campaign support, but in comparison to the amount of money they are “losing” (by the middle class having discretionary money to spend) every year a President Trump is in the WH and GOP controls the Senate is another year thbge fracking revolution continues and they lose at least $200Billion that could be flowing into their pockets by squeezing middle America.

Now with these kind of numbers, average folks can see what will be done to them if the GreenSlime is able to buy the White House for a Democrat President next year. Serfdom awaits the middle class if a Democrat wins and then shuts down the US’s shale fracking energy revolution and US Energy dominance via the natural gas boom.

Reply to  Joel O'Bryan
November 19, 2019 9:14 pm

I immigrated to America (Texas) to become a cowboy. Politicians and Billionaire boneheads can kiss my demon clad butt. That attitude works in all kinds of surprising ways.

Carbon Bigfoot
Reply to  Troe
November 21, 2019 5:11 am

The “lukewarmers” at the Heartland still continue to use the greenhouse gas mantra of the Climate Change Derangement Syndrome Clowns, which detracts from the benefits of the fracking revolution.
In case no one noticed it has STABILIZED energy prices for years and has benefited crop yields worldwide with the by-product of combustion CO2 from the back-up generators stabilizing the grid.
We have no one at the Heartland that understands that communicating in the enemies narrative does not advance our cause.

November 19, 2019 6:46 pm

New York families are losing a whole lot more than just a few hundred bucks on natural gas prices. The State and region are losing out on tens of $Billions annually in lost economic activity.

But those enormous gas deposits in New York will still be in the ground when the Climate Hoax falls apart.

Reply to  DocSiders
November 19, 2019 7:07 pm

when the Climate Hoax falls apart.”

You mean “if” the climate hoax falls apart. There are a lot of rich Liberal elites spending an awful lot of money now and over the next year to see that the hoax continue, the climate propaganda goes to Level 12, and the middle class keeps getting fleeced in NY state and California.

Reply to  DocSiders
November 20, 2019 12:11 am

AOC says, ‘hold my beer’…….

Reply to  DocSiders
November 20, 2019 12:54 pm

The Climate Hoax will transition smoothly from Global Warming o Global Cooling, with the same culprits and the same fixes. And most of the world will be taken in by it – again.

November 19, 2019 6:59 pm

The URL link to the US Chamber of Commerce report from 3 years ago (Sept 2016) brings home what was at stake in the 2016 election:

“The simple result of our analysis is pretty clear: we’d be in a world of hurt. The U.S. would be short 4.3 million jobs and over half-a-trillion dollars in annual GDP. Perhaps of more concern to most Americans, electricity prices would be 31% higher and we’d all be paying 43% more at the pump. Carbon dioxide emissions would be 23% higher and we’d be importing 160% more oil.

“We forget that the energy renaissance created more than 4 million jobs.

Imagine how much of world of hurt we’d be in now with a Democrat President Clinton shutting it all down with WOTUS rules, more methane rules, shutting down Gulf of Mexico leases for oil and gas. I can’t even imagine how I’d manage if my truck fuel bill, home nat gas, electricity bills were double their current amounts. And I think I am doing okay. But I know there are millions Americans living in NY and California who are feeling thereal pain and financial hurt of their state’s dumb energy policies.

And to imagine that Bernie, Pocahontas, and most of the other Democrat Clown Car passengers want to destroy that so the GreenSlime billionaires can feed off my meager monthly disposable income.
To them I say Frack You. MAGA. I’ll vote a crazy tweeting Trump any day over your insanity that wants to see me sharing the dog food dinners with my dogs to get by.

Tom Abbott
Reply to  Joel O'Bryan
November 20, 2019 5:31 am

A 43 percent increase in the price of gasoline would equal about $1.25 per gallon at current prices. For each increase in the price of gasoline of $0.80 per gallon, the Gross Domestic Product of the United States is reduced by one percent. One percent of U.S. GDP is a lot of money to lose.

And, of course, raising gasoline prices harms the poorest people in society the most.

November 19, 2019 7:09 pm

Great piece and information, Tim.

November 19, 2019 7:23 pm

Unless we change the narrative from saving humanity from AGW the economics wont come into play until it’s too late. It will continue to be slow and stealthy but by the time the average populace figures out what happened major damage will have already been done.

November 19, 2019 8:10 pm

“This breaks down to $2,500 in savings per family per year.”

That’s on average. Imagine how much it is saving Al Gore.

November 19, 2019 8:36 pm

Let’s try to remember and to distinguish the difference between AGW and ecological pollution, or is that the idea: To discount the latter because the former is debunked shite? Personally, having worked and lived around areas where fracking takes place you couldn’t force me to drink the water in these areas, let alone have my loved ones drink it. But, hey, go ahead if that’s what you crave. As long as we can make a profit, right?

Also, Heartland Institute? Seriously?? Since they said it surely it must be true.

Paul Penrose
Reply to  Kenton
November 20, 2019 10:05 am

So, you had the water tested in those “areas where fracking takes place”? Or are you just using emotional appeals? Since I live in a rural area, I have a well and a septic system. They are less than 200′ apart. I suppose you would refuse to drink the water at my house, but I promise you it is cleaner than the water in most large cities.

Also, without the profit motive driving free enterprise, you would be a serf toiling away in a field somewhere. Almost all the inventions and technology that makes our modern life possible were created by the free enterprise system, i.e. people chasing profit. If you want to see what it’s like without it, then check out places like Ethiopia.

November 19, 2019 9:09 pm

Most of the countries with the highest adoption of solar and wind are now down to zero or below zero GDP growth. That is what is in store for the US if Dems get their Green New Deal. (Germany, Sweden, Nicaragua, etc….). Great recipe for financial collapse.

November 19, 2019 9:37 pm

Obamakkare is saving me $2,500.00/month on my health insurance! Oh. Wait. That’s not right. Obamakkare is COSTING me $2,500.00 MORE per month in insurance premiums (for crappier service).

Some people tell you LIES … over and over and over … with a straight face.
Other people simply deliver the goods without saying a word.

It makes all the difference when you can discern the difference between the two.

Reply to  Kenji
November 20, 2019 6:15 am

Obamakare is criminal. I was shocked to find out that it was costing my brother, a widower, $16,000+ / year for health insurance for himself and his two daughters. That’s the minimum for his bracket in his State.

This is with his new job. He had a great job with a small business that allowed him to buy his own health insurance for his family at a fraction of the cost he is paying now. But the rules for Obamakare forced that business to shut down since they had more than 30 employees. Just ate up all their profits.

As for myself I can’t afford any Obamakare. In my State for just me it would be like making an additional mortgage payment every month. I just pay out of pocket for health care as it comes up and that saves me money. I have no other choice. I broke arm very badly two years ago. The total cost as a self payer was less than the premiums would have been for one year of Obamakare.

When in 2009 and gasoline prices were $5.00 / gal it eventually cost me and my partners the promising business we had started. Writing checks of $25,000 to pay the fuel card bills was a bit surreal.

Retired Engineer
Reply to  KT66
November 20, 2019 2:44 pm

Obamacare s a great thing for well off early retirees who need to bridge the gap to Medicare. If you can keep income down by postponing pensions, not claiming SS or making. significant 401k withdrawals, but instead take money from Roth accounts and other sources not considered income you can qualify for around $20k/year in medical subsidies even if you have Millions in the bank. This coverage in some areas (at least) costs less (even after generous employer subsidy’s) and provides much better coverage than my work plan did.

Can’t say that I can articulate any reason, beyond political expediency or incompetence, as to why the government should be generous in that way to some while burdening others who are struggling mightily. I have no doubt that energy plans in this same vein could also be easily gamed.

November 20, 2019 1:26 am

Here is something saving South Australian electricity users money:

“We know that the 100 megawatt capacity of the existing Hornsdale battery has saved South Australian electricity consumers $40 million per year since its inception. This 50 per cent increase in capacity to the battery, plus the additional services that we will receive, will add an additional $47 million per year of savings to South Australia electricity consumers.
“The savings to the cost of the wholesale electricity will then, a year [or] two down the track, flow through to the retail costs that consumers pay.”

Reply to  griff
November 20, 2019 9:08 am

The first thing, ALWAYS, that the drive-by media manipulate are numbers (especially polls). So I don’t believe your drive-by-news-source numbers.

Fake news.

Reply to  griff
November 20, 2019 9:14 am

$47 million per year spread across SA customers. Seriously Griff?
Do you know how to do higher math … like division?

Bryan A
Reply to  griff
November 20, 2019 9:45 am

W O W…
Quite the feat.
Current battery 100MW Power time supplied before depletion 12-13 minutes
Added capacity 50MW Additional time supplied before depletion 6 minutes.
In the event of a situation which takes the wind farm offline, the battery will deplete in 18 minutes instead of 12.
6 minutes of power for $25M sure sounds like a bargain Rip Off to me.

Paul Penrose
Reply to  griff
November 20, 2019 10:17 am

OK, just for fun, I checked out griff’s link. Here’s something he neglected to tell us:

“Neoen [the French company that runs the facility] claims the Hornsdale battery saved energy consumers more than $50 million in the battery’s first year of operation.”

There is no data to back up their claim. It is just self-serving speculation as far as I can tell. All to get more government money to expand the facility.

More lies and half truths from one of our resident trolls.

Reply to  griff
November 20, 2019 1:55 pm

Hi griff,

I’m gunna guess you don’t live in SA … on the tail of 16 crappy years with a very ‘progressive’ political party which managed to destroy our capacity to generate cheap electricity using coal we now have ‘progressive lite’ which has been trying to convince the regular folk that wind, solar, batteries et al., will cause energy prices to fall … I can assure you and anyone else that cares that this is patently false. I live here and my documented evidence is my electricity bill. When the federal government got ‘tough’ on the energy producers prices fell by 3 hundredths of a cent … oh LORD we been saved! AGL is busy putting in a massive gas fired back-up; we have (on paper) the renewable capacity to run the state and if you believe the BS some left over to sell to NSW. If this is the case why do we need the fossil-fuelled back-up?

Go and sell your BS somewhere else , and oh, have a great day.


Reply to  Andy
November 20, 2019 2:09 pm

‘As retail prices for 2019/20 have not been published we have used 2018/19 energy/retail prices including an estimated retailer discount of 15.5% on energy usage prices to calculate increases. On this basis, the retail bill for the average customer will increase by $46 (2.5%) due to SA Power Networks’ distribution and metering charges. Other charges (recovery of transmission charges and the SA Government’s PV FiT Scheme costs) will increase the retail bill by $13 (0.7%). The total of these charges results in a $59 (3.2%) increase in the average residential customer’s retail bill.’

Thank god for the battery !!

Reply to  griff
November 20, 2019 7:31 pm

Thanks Griff but – if it was not for the intrusion of intermittent and unreliable solar and wind generation, there would be no requirement to stabilise the grid. They are bragging about “saving” $47M whilst the actual cost imposed on the grid was probably closer to $100M. The article is a good news story but needs to be framed within the reality of unreliable generation.

November 20, 2019 2:14 am

You guys keep falling for the canard (false notion) regarding “greenhouse gasses! We should refute the notion that reducing CO2 is a noble objective–it is not! Instead, think of “carbon” as synonymous with “food”!

Increased CO2, whatever the source, is responsibble for saving millions upon millions of people in third-world countries from malnutrition, starvation, even death!

So stop pandeering to the demented, controlling, even nefarious regimen the UN and others have foisted on our lexicon regarding “greenhouse gasses”! Instead, celebrate the plight of those who predicted the earth couldn’t keep pace with foodstuff production and have failed miserably in their predictions!

If we adopt their carbon-limiting rhetoric and eventually yield to their demands of restricting “carbon” emissions and worse, of sequestering “carbon”, they have won the battle and control humanity in numerous ways, most of which are debilitating or even deadly!

Joe B
November 20, 2019 3:51 am

To use a real life example to put this into some context …
4 wells on the Carpenter pad (EQT, Greene county, PA) have produced a total of 35 billion cubic feet in 6 to 10 months online production

Using average numbers of ~62,000 cubic feet per year per household and 3 people per residence, these 4 wells would provide natgas to about a million and a half people for a year.

That is to say, a ~$50 million dollar investment from EQT can offer the cities’ residents of Cleveland, Cincinnati, Pittsburgh, St. Louis a year’s worth of fuel to heat their water, cook their food, dry their clothes, warm their homes.

4 wells.
Just a few months online production.

November 20, 2019 4:13 am

Why not in California?

Did you ask yourself that? Probably not. California has the majority of the Democrats in congress. Flipping a few linguine spined Republicans, they could expand the ban on fracking to the entire nation, but they don’t.

Why not?

Because California started fracking decades ago. Not to pump oil or natural gas. That would make too much sense.
No. In California, the land of earthquakes, fracking is a routine practice to recharge geothermal power plants.

Democrats here DEFEND anthropogenic tremors and quakes caused by deep well hydraulic fracturing as insignificant, controllable, environmentally, and economically necessary.

I know this because of the recent Kincade fire, north of Santa Rosa, was started by a PG&E geothermal plant.
A PG&E transmission line experienced problems moments before the 16,000‑acre Kincade fire started inside The Geysers, a sprawling complex of geothermal energy facilities nestled in the mountains between Sonoma and Lake counties, according to a utility filing with state regulators.

Cal Fire later discovered a broken piece of equipment on a PG&E transmission tower that was not deactivated during a power shutdown initiated by the San Francisco-based utility before the fire broke out Wednesday night, the company reported in a filing with the state Public Utilities Commission.

PG&E said it became aware of a problem on a 230-kilovolt transmission line running through The Geysers at about 9:20 p.m. Wednesday. The fire was first reported at 9:26 p.m., when firefighters were sent to a vegetation fire in The Geysers on John Kincade Road at Burned Mountain Road near a small power plant, according to dispatch reports.

A time-lapse video from a fire detection camera near Santa Rosa captured the ignition of the fire.

We should study the Democrat’s tactics and arguments for justifying The Geysers Power complex to proactively combat New York type anti fracking Luddites in other regions of the country.

They have it covered.

Tom Abbott
November 20, 2019 5:40 am

From the article: ““In other words,” the report notes, “lower energy prices are like a progressive tax cut that helps the poorest households the most.”

Another reason to reject a Carbon Dioxide tax. The poorest people suffer the most under such a tax.

Promoters of a Carbon Dioxide tax claim the poor will be compensated for any losses produced by a Carbon Dioxide tax, but the poor won’t be compensated for all the other costs they will accrue due to a Carbon Dioxide tax increasing prices on everything in the economy.

Taxes, of any kind, are bad for families and bad for business.

November 20, 2019 7:56 am

The enviro-wackos have left behind just consideration of CO2 now, it’s fossil-fuels in general. They don’t care if CO2 emissions are lower, natural gas is a FF & just as evil as oil or coal.

Get on your bicycle, or walk, or else!

Steve Z
November 20, 2019 11:19 am

The linked article mentioned a reduction in particulate emissions to the atmosphere due to fracking. This is most likely due to the fact that fracked oil from Texas and North Dakota is lighter and contains much less sulfur than crude oil from the Middle East. Particulate emissions result from unburned heavy hydrocarbons, mostly polycyclic aromatic hydrocarbons (PAH’s) in diesel fuel, which are emitted from the stack. Fracked crude oil from Texas and North Dakota contains less of those heavy PAH’s than Middle East crude oil, which was used in the past before fracked crude oil became available.

Chris Hanley
November 20, 2019 7:52 pm

Total ‘renewables’ (33%) are close to surpassing combined coal (37%) for electricity generation in Germany at enormous cost for little to show in reduction in total CO2 emissions.
comment image
However for primary energy consumption oil and gas far exceed renewables.
Germany is the ‘crash test dummy’, from what one reads wind in particular has just about reach the limit of public tolerance, it will be interesting to see what happens when the shut-down of nuclear plants occurs as promised in 2020.
Thirty years is not a long time — at least in retrospect.

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