New Report Says Fracking Saved Americans $1.1 Trillion Over Past Decade

Research & Commentary by Tim Benson

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. 

Another study published in the American Economic Review in April 2017 found “each million dollars of new [oil and gas] production produces $80,000 in wage income and $132,000 in royalty and business income within a county. Within 100 miles, one million dollars of new production generates $257,000 in wages and $286,000 in royalty and business income.”

Hydraulic fracturing enables the cost-effective extraction of once-inaccessible oil and natural gas deposits. These energy sources are abundant, inexpensive, environmentally safe, and can ensure the United States remains a leading energy producer far into the future. Therefore, policymakers in the “Shale Crescent” should refrain from placing unnecessary burdens on the natural gas and oil industries, which are safe and positively impact their states’ economies.

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

The Value of U.S. Energy Innovation and Policies Supporting the Shale Revolution
https://www.whitehouse.gov/wp-content/uploads/2019/10/The-Value-of-U.S.-Energy-Innovation-and-Policies-Supporting-the-Shale-Revolution.pdf
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
https://www.heartland.org/publications-resources/publications/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
https://www.heartland.org/publications-resources/publications/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
http://www.rff.org/files/document/file/RFF%20Rpt-SPF.pdf
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
https://www.heartland.org/publications-resources/publications/impacts-of-the-natural-gas-and-oil-industry-on-the-us-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
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
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?
https://www.heartland.org/publications-resources/publications/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?
https://www.heartland.org/publications-resources/publications/what-ifamericas-energy-renaissance-never-actually-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
https://www.heartland.org/publications-resources/publications/climate-change-reconsidered-ii-fossil-fuels—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
https://www.heartland.org/publications-resources/publications/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.

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42 thoughts on “New Report Says Fracking Saved Americans $1.1 Trillion Over Past Decade

  1. This is a great story that proves the importance of energy independence and the need for multiple sources of fossil fuels..but alas the left and environmentalist response to this will be that you can’t put a price on the environment, no matter how much it impacts the pockets of the American consumer.

  2. That’s it. Talk money. Look what was saved. Now look what was cost of the supposed alternative. The mandatory use of wind and solar at a more expensive source must be presented better. They produce expensive power and there are the other government directed cost which does not appear on our bills. Dollars and cents mean one hell of a lot more than a 1 or 2 % of CO2 in the atmosphere. That’s even assuming, repeat assuming, that a delta in CO2 has any correlation to temperature.

  3. Not to mention how much was saved by a President who has a MAGA attitude in the white house. Reduced restrictions on fracking, no cap and trade, no limits on CO2, removed future restrictive CAFE standards, pulling us out of the Paris agreement, gutting the EPA and reducing government regulations to name a few.

    Those have all been consumer friendly actions that likely added additional billions to what citizens have saved.

    It is great having a president who is skeptical about the AGW myth.

  4. Yea, but fracking is killing coal. Providing a reliable, on demand electricity at rates that coal, nuclear and renewables can’t match. It’s almost like the laws of economics are real.

  5. This is what the wacko “warminists”, weirdo “environmentalists” and every one of the 2020 Democrat POTUS candidates promise to put a stop to, with Bernie S claiming the fossil fuel producers should be arrested and imprisoned, to wit:

    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).

    Does anyone actually believe that “renewable energy” production (solar/wind/biomass) can provide $93 billion in savings within a 10 year period, …… or even a 30 year period?

    • By design, renewable wind and solar energy is intended to greatly increase energy costs to the consumer.
      The Green Energy scam is not just a re-directing of energy revenues to the Wind and Solar investors, but to greatly increase the revenue stream as well into those investor’s funds. The utilities don’t care as the state regulators will allow them to pass thru the higher costs to consumers, and with the forced move to elecric from natural gas and EVs, they’ll sell more electricity for more profits.

      Of course “green energy” is a highly regressive “tax” scheme on everyone that the politicians supporting the wind and solar scams could never do through direct taxation without getting thrown out on their keisters by voters. And most people are just sleeping their way thru life while the Liberals are fleecing them and set to get far worse.

  6. Santa Barbara Independent
    California Cities Starting to Ban Natural Gas in New Buildings
    Berkeley and Other California Cities Can Lead to a Statewide Phase-Out of Natural Gas

    As California goes, so goes the nation.

    The ugliness is coming.

  7. Meanwhile in the UK:
    Corbin junior: I’m going to tax oil and gas companies for heating the planet.
    Corbin senior: Don’t be silly, planet is heated by sun.
    Corbin junior: Nonsense.
    Corbin senior: I’m telling it’s sun stupid, I’ve got PhD in astrophysics from Imperial College.
    Corbin junior: Joanna Haigh from Imperial says you are wrong.
    Corbin senior: Listen Jeremy, I know what I’m talking about, I do most accurate weather forecasts.
    Corbin junior: Piers, you listen to me, your forecasts are rubbish, you wasted lot of our family money to learn nothing.
    Corbin senior: Ha, listen who is talking, you got two A-Levels at grade E, the lowest-possible passing grade and you left school at 18.
    Corbin junior: Good enough to be the UK’s next Prime Minister.

  8. Fracking has been around for about sixty five years, it is horizontal directional drilling that is relatively new in the last ten to fifteen years. Horizontal directional drilling is what made shale oil development possible. The war on fracking is part of the war against the energy, and a lot of the money that funds the eco terrorists comes from outside of north America, and laundered through foundations like the Oak foundation. Who then funnel that money to foundations in north America like the Rockefeller foundation, who then distribute it to the eco terrorist outfits like the Sierra Club.

    • Rob, you are correct. I’m sure whatever amount of money imagined being criminally-laundered thru such organizations & NGOs is vastly underestimated. The Clinton Foundation used to be a major one, but I think they’ve lost some favor & the newest up-and-comer criminal organization is the Obama Foundation.

  9. And those goofs in California want to ban new natural gas hook-ups.

    Same for NY, the utility stopped new hook-ups because the existing pipeline infrastructure is full, not expanded due to “green” concerns about bringing cheap energy from Pennsylvania to New York !

    This should spark the big protests (yellow vests !) as people see what this nonsense will cost them…and don’t mention the electricity prices.

    • What it will spark is an exodus from the city into other states where they will bring their communism with them ruining everyone else’s lives.

    • Well if the Green nitwits keep blocking natural gas pipelines bringing it into the state from Utah, and the Colorado-New Mexico Four Corner’s Region, the providers will have no choice but to stop allowing new consumer hookups. They can’t deliver gas they don’t have.

  10. Post Title:
    New Report Says Fracking Saved Americans $1.1 Trillion Over Past Decade

    Now these are some numbers I can believe. But saving money is something the enviro-fruitcakes don’t care about or can’t comprehend.

  11. But–for the first time in history earthquakes have been caused by mankind.
    Fracking.
    Which goes along with other firsts.
    Warming threatens all species of life, for the first time.
    As does increasing amounts of atmospheric CO2. For the first time.
    So, then you think that if everyone had a degree in geology or geophysics there would be comprehension sufficient to widely condemn the nonsense.
    But in checking out the US Geological Survey site—global warming and CO2 stuff.

    • “Warming threatens all species of life, for the first time.” Not quite. The magazines were touting global warning just as the 20th century dawned. That was followed by warnings of an early ice age, followed by global warming in the ’30s. My grandfather used to keep articles for me. Except for my dad, his offspring were all farmers, and weather was important. They were all convinced climate scientists didn’t know the difference between weather and climate. To this day my dad’s generation talk about global warming in the Spring, and global cooling in the Fall. And think they are every bit as accurate as climate scientists, even if they are telling a joke. Even though I was the first college educated (degree in physics), I think they are 97% right.

  12. But, but, but, you don’t understand. That money has been stolen from [insert your imaginary victim(s) here].

  13. Meanwhile, GangGreen Inc. have been robbing us blind and hurting business and industry, so we may be ahead some, but nowhere near what we could be.

  14. This week I spent $2.15 per gallon of regular gasoline in the region south of St. Louis. Then there was a 5 cent discount from the gasoline credit card and a further 10 cents off from rewards at the pump. So the resulting $2.00 per gallon equates to $0.94 per gallon in January 1989. I’ll keep my used and reliable V8 SUV I have from the most reliable brand for long-term ownership and skip the prepaying for gasoline, insurance and taxes with overpriced (new) and less reliable 4 cylinder cars, EVs, and hybrids. I’ll also watch the loss to disposable incomes and lifestyles in other regions. Higher savings offers the option of increased savings or higher discretionary spending, at least before the next over reach energy policy czar dictates otherwise.

    https://www.bls.gov/data/inflation_calculator.htm

    see also the Scotty Kilmer mechanics channel on Youtube

  15. California and New York should be cut off from all sources of fossil fuel for a time sufficient to command understanding by the least competent person. That certainly means the governor and legislators.

  16. This analysis does not consider propane. Propane is widely used across rural America for home heating and in agriculture to run farm machinery.

    “Over 50% of rural Americans use LP gas in their homes, and 40% also use it in their farming operations. With over millions of gallons of propane/year used in American farm country. It’s clear that farms find many uses for it beyond home heating and appliances.

    Over 800,000 farms across America regularly use propane in their day-to-day agriculture operations. Clean, reliable, and efficient American propane provides the power to plant, water, harvest, dry, store, and transport our national food supply to and from locations.”
    https://www.crystalflash.com/news/propane-for-agriculture/

    And anyone who has an RV (like me) also uses a 10-12 or more 20 lb tanks-worth of propane every winter-spring when I take it to Texas. Ranchers across the West use propane to thaw ice on ponds for their cattle to get water. And the ubiquitous home BBQ grill commonly uses 20lb propane bottles. So lots of Americans use it.

    Here is EIA chart on propane nominal price for residential consumption since 1990.
    (note: The EIA only collects this data during the heating months, October-March for the US residential consumer. EIA prices are in nominal dollars; not adjusted for inflation.)

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M_EPLLPA_PRS_NUS_DPG&f=M

    This is a somewhat flawed methodology since many people will fill their propane tanks during the summer when propane prices are lower (same with people who use oil heating in the Northeast). Still one can easily see the beginning of an upward rise in propane prices starting in 2002 and peaking in 2014.

    For the beginning of this year’s heating season, the October 2019 nominal price for propane was $1.843/gal.
    Propane spiked in Feb 2014, but since then has been on decline, despite the past several US winters being below average cold in the second half of the heating season when propane prices peak.
    Some recent April’s have been some of the coldest or near coldest in NOAA’s 125 data records.
    https://www.noaa.gov/news/us-had-its-coldest-april-in-more-than-20-years

    The EIA-listed retail consumer November 2019 propane nominal price is $1.85/gal. After adjusting for inflation, propane hasn’t been this cheap at the beginning of the US heating season since November 2003, that is 16 years ago when it was $1.33/gal.

    That’s more US Energy Dominance in action.
    MAGA.

  17. The company I work for in Belgium just this week froze orders (4 year rental) of employee company cars 🚗. (Fortunately I ordered mine a few weeks ago.) The reason they gave was that in 2020 new regulations will begin forcing a move to electric cars. This is being done in a clumsy way – as well as opaque and undemocratic like everything in the EU. I have a bad feeling that there will be bankruptcies and significant economic damage from this. You can’t change transport technology overnight by legal fiat (or even Skoda or BMW). They (we) will learn this the hard way. Ironically it’s probably going to be a very cold winter also. Deep frosts already in November.

  18. The 20lb propane bottle swap/fill has disappeared in Michigan. It was 17.5 lbs for a while and now I believe its only 15lbs.

  19. More than just money, it is changing global geo-politics, for the better.
    Reducing dependence on petroleum products from the Arabian/Persian Gulf can only be a good thing for most of the world.

  20. That’s not peanuts, more than 100 billion per year. That’s jobs, that’s people off the dole, that’s tax revenue, that’s mortgages paid and college tuition covered, that’s full fridges and laughing children. That one of the major reasons why renewables have not yet done to the US what they have done to Germany or Australia. For some states at least. That’s a good future – not a flickery one.

  21. Hey its only $1.04 trillion. With cap and trade coupled with the low carbon fuel standard the residents of California are likely spending $6 billlion a year in higher energy costs.

    In other good news, the state of California just announced they have a $7 billion surplus!!!

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