mead cohen berger shevtsova garfinkle michta grygiel blankenhorn bayles
Gassed Up
Shale Saved Americans Millions Last Year

Average American wholesale electricity prices were cheaper in 2016 than they were the year before, and as is so often the case in these recent stories of cheaper U.S. energy, families can thank the shale industry for their cheaper power bills. The EIA reports:

Average wholesale electricity prices at major trading hubs across the United States during the first quarter of 2016 were significantly lower than during the same period in 2015, ranging from 24% lower in California to 64% lower in New England. Monthly wholesale prices for the rest of 2016 were slightly below 2015 prices and generally averaged between $20 and $45 per megawatthour (MWh). The primary driver of the low wholesale electricity prices was the sustained low cost of natural gas, which is the fuel that often determines the marginal generation cost in most power markets. The low cost of natural gas also encouraged increased use of the fuel for U.S. power generation in 2016.

The cost of natural gas delivered to power generators averaged $2.78 per million British thermal unit (Btu) during the first 10 months of 2016 (the latest data available), which was 17% lower than the average price during the same period in 2015.

While U.S. oil production took a dip this year as shale producers struggled to cope with bargain oil prices (though we should note that output has increased by more than 300,000 barrels per day over the past three months), American natural gas production stayed strong throughout the year. This flood of new supplies has helped bring natural gas prices to historic lows, which in turn has helped make the electricity generated from natural gas-fired power plants significantly cheaper.

Natural gas-fired power is so cheap, in fact, that it’s undercut coal to become the cheapest option for baseload power in the America. So while the shale revolution is cutting U.S. power prices, it’s also displacing the dirtiest energy source around—coal—and replacing it with an option that’s just as reliable, but that burns just half of the greenhouse gases and far fewer of the dangerous localized air pollutants.

It’s difficult to overstate the importance of the shale boom to our country’s energy security and the economy. The dual technologies of hydraulic fracturing and horizontal well drilling have unlocked a treasure trove of valuable hydrocarbons, and the benefits of this energy renaissance are as apparent in the homes of average Americans as they are to the foreign policy establishment.

Features Icon
Features
show comments
  • Disappeared4x

    The shale boom is apparently NOT apparent to most Democrats in Congress. Anti-fracking, anti-hydrocarbon protestors are very well organized, and immunized against any discussion that suggests economic benefit, or CO2 reduction from natural gas whether from fracking or not.

    I can not even look at pictures of the signs that made me so angry. “No Fracked Gas in Mass”
    Intolerant Zealots.

  • CaliforniaStark

    Since the role of CO2 as a pollutant is controversial; believe it is useful to look at the amount of other pollutants natural gas produces relative to several other substances (NO2, Sulfur, mercury, particulates) — it explains how natural gas got a reputation as being a cleaner fuel compared with oil and coal (based on pounds per billion btu or energy input).

    Nitrogen Oxides: 92 (Natural Gas); 448 (Oil); 457 (Coal)
    Sulfur Dioxide: 1 (Natural Gas); 1,122 (Oil); 2,591(Coal)
    Particulates: 7 (Natural Gas); 84 (Coal);2,744 (Coal)
    Mercury: 0.000 (Natural Gas); 0.007 (Oil); 0.016 (Coal)
    Carbon Dioxide: 117,000 (Natural Gas); 164,000 (Oil); 208,000 (Coal)
    Carbon Monoxide: 40 (Natural Gas); 33 (Oil); 208 (Coal)

    Those who point to the “potent” effect of methane (CH4) on global warming, usually fail to point of that methane only last in the atmosphere 10-15 years.

  • Proud Skeptic

    Even though the price of oil dropped right after I installed my carefully considered wood pellet boiler, I am a YUGE fan of fracking and low oil prices. Our gasoline bills went from $700 a month to less than $500. Sometimes as low as $350. While I would have loved to have saved the additional five hundred or so dollars a year on heat without paying for the cost of a new boiler, I’m happy to take the bad with the good.

    Then, of course, there are so many benefits on a national scale…a general improvement in the economy and competitiveness of both American products and as a place to manufacture. Nothing but good here as far as I am concerned.

    Once the climate models start synching up with the actual temperature measurements over a substantial period of time, I hope my grandchildren will make the right decision on what to do about anything we might be doing to endanger our environment.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service