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Hail Shale
While Europe Gets Gouged, Americans Enjoy Cheap Power

We told you yesterday that spot prices for German electricity jumped more than 17 percent in one day due to constricted supplies from renewable producers and French nuclear reactors, but as green-crazed Germany continues to wrangle with some of Europe’s highest (and most volatile) electricity prices, American households are about to see the first annual drop in average electricity prices in 14 years. The WSJ reports:

In the first six months of 2016, American residential consumers paid 12.4 cents a kilowatt hour, on average, a 0.7% drop over the same period of last year. If the trend continues, it would mark the first annual decline in home power prices since 2002. Prices for industrial and commercial customers already had been dropping for a couple of years.

There are several forces working in favor of the drop, including low prices for natural gas, which is an increasingly important fuel used to generate electricity. Overall U.S. electricity demand slumped 1.6% between January and July of this year versus a year ago, according to Energy Department data.

Plentiful—and therefore cheap—natural gas is one of the biggest drivers behind this drop in average American electricity prices, and this bounty comes to us courtesy of none other than the shale boom. Thanks to fracking, U.S. natural gas production is up more than 37 percent over the past decade, and at this point the hydrocarbon has gotten so cheap that it’s doing something very few other energy sources have ever done: it’s outcompeting coal on price.

Shale gas’s ascendance is undoubtedly a boon for Americans, who as we can see are paying less on their power bills every month. That’s especially helpful for poorer households, for whom these bills take up a larger slice of a monthly budget. Just as expensive energy can be seen as a kind of regressive tax that disproportionately harms the poor, so too can we consider cheap power as especially welcome for lower-income families.

Frack, baby, frack.

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  • Angel Martin

    Another way to help low income people, kill all the excise taxes on transport and heating fuels !

  • Frank Natoli

    In the first six months of 2016, American residential consumers paid 12.4 cents a kilowatt hour
    Not that many years ago, a pal of mine in Missouri was paying 8 cents per kilowatt hour. But that was before Democrats put Obama in control of the EPA, which promptly wiped out coal fired electric plants, which “necessarily skyrocketed” electric prices.
    And now most of the country wants to elect a woman who will do more of same.
    Thank you, Democrat voters.

    • LarryD

      One of the few promises Obama has kept, more or less.

    • mikekelley10

      A couple years ago, I looked up electricity prices in Gillette, Wyoming, which is surrounded by coal mines. They were paying about 5 cents per kw/h.

  • Andrew Allison

    “In the first six months of 2016, American residential consumers paid 12.4 cents a kilowatt hour, on average, a 0.7% drop over the same period of last year.” “Overall U.S. electricity demand slumped 1.6% . . . .”
    Could there possibly be a link between supply and demand?

  • mikekelley10

    “Renewable” power is the gift that keeps on giving. It also causes more frequent blackouts:

    –The Australian Energy Market Operator’s preliminary report into the recent South Australian blackout reveals that the primary reason for the total loss of power was a sudden reduction in wind power being fed into the electricity network, according to free market think tank the Institute of Public Affairs.

    “The Preliminary Report makes it clear that while the weather was responsible for multiple transmission system faults, the blackout did not occur until after the sudden loss of 315 megawatts of wind output at six separate sites over a six second period.”–

  • klgmac

    Expensive electricity generated from alternative sources is forcing people into energy poverty and is truly a crime against humanity.

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