Fracking Saves Money, Reduces Greenhouse Gases

Hydraulic fracturing, commonly referred to as 'fracking' is the process of extracting natural gas and oil situated several miles deep beneath the Earth's surface. Over the past decade, fracking has increased the output of these two vital energy sources by 40 percent and 95 percent, respectively, and the fracking industry now supports nearly three million US jobs. Thanks to fracking, energy prices have dropped by leaps and bounds, saving billions of dollars for consumers who use natural gas or oil to heat and fuel their homes, businesses, cars, and boats, spurring massive economic growth. ¹

$2,500 in savings per family per year

Different reports show increased savings varying from $1300 to $2500 in annual benefits to American households.

A February 2019 report shows increased oil and natural gas production from fracking saved American consumers $1.1 trillion in the decade from 2008 to 2018. These savings come from the lower coast of natural gas due to increased production. According to the report, natural gas 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. ² 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. ³ Fracking 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. (⁴ A more recent report released in October 2019 by the White House Council of Economic Advisers (CEA) estimates increased oil and natural gas production from fracking saves American families $203 billion annually on gasoline and electricity bills. This breaks down to $2,500 in savings per family per year. 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. ⁵

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False claims invented by fracking opponents, most of whom receive substantial amounts of funding from anti-energy activists

The report also notes the positive effects of the fracking revolution has had on the environment, estimating it lowered energy related greenhouse gas emissions by 527 million metric tons per year from 2005 to 2017.  This contributed to a greater declines in GHG emissions (relative to the size of the economy) in the United States than in the European Union over the same period.  However, the well-documented success of fracking have largely been unnoticed and unappreciated by the public and maligned and attacked by some lawmakers because of numerous false claims invented by fracking opponents, most of whom receive substantial amounts of funding from anti-energy activists. As a result of these efforts, policymakers in several states have chosen to place burdensome and unnecessary restrictions on fracking. Some states have even approved fracking bans, severely limiting economic opportunities. ¹

References

1. Tim Benson and Linnea Lueken, “Policy brief: debunking four persistent myths about hydraulic fracturing,” heartland.org, October 12, 2018
2. Kleinhenz & Associates, “Natural gas savings to end-users: 2008-2018, a technical briefing paper,” shalecrescentusa.com, February 2019
3. Tim Benson, “Research & Commentary: new report says fracking saved Americans $1.1 trillion over the past decade,” heartland.org, November 21, 2019
4. Alexander Bartik et al., “The local economic and welfare consequences of hydraulic fracturing,” papers.ssrn.com, December 21, 2016
5. “The value of US energy innovation and policies supporting the shale revolution,” The council of Economic Advisers, October 2019, whitehouse.gov