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. read more