The massive increase in domestic shale development, led by hydraulic fracturing (“fracking”), has caused natural gas prices to plummet in Indiana, according to a report from the Consumer Energy Alliance (CEA). Consequently, residents and businesses in the Hoosier State saved more than $12.7 billion from 2009 to 2019.
“Expanded and modernized natural gas infrastructure” over the past decade saved residential consumers in Indiana $4.6 billion by reducing natural gas prices by 31 percent, while commercial and industrial consumers saved over $8.1 billion combined, thanks to a nearly 50 percent drop in prices.
“The need for affordable, reliable and environmentally responsible energy is more important than ever as Indiana emerges from the COVID-19 pandemic,” CEA Midwest Executive Director Chris Ventura said in an accompanying press release. “While small businesses and manufacturers continue to face challenges and unemployment remains at unacceptably high levels, Hoosiers deserve energy that they can count on to be both affordable and reliable. This is especially true for those on fixed incomes or living below the poverty line, who are disproportionally affected by higher energy costs. The savings Indiana’s energy consumers have received over a decade have helped families and businesses overcome economic hardship and will continue to do so as we enter another uncertain year.”
Moreover, the oil and natural gas industries supported more than 124,000 jobs in Indiana in 2015. These vital industries produced more than $6.1 billion in labor income and accounted for $14.8 billion in economic impact, according to a 2017 American Petroleum Institute study prepared by PricewaterhouseCoopers.
It should come as no surprise that shale development is spurring economic growth throughout Illinois. 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.
Fracking 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 well beyond the twenty-first century.
Therefore, Indiana policymakers should refrain from placing unnecessary burdens on the natural gas and oil industries, which are safe and positively impact the Hoosier State economy.
The following documents provide more information about hydraulic fracturing and natural gas.
Abundance of Natural Gas Helps Indiana Maintain its Competitive Edge
This report from the Consumer Energy Alliance examined how the shale revolution across the United States has provided benefits to residents of Indiana by boosting disposable income, revitalizing communities, and saving residential users $4.6 billion and commercial and industrial users $8.1 billion from 2009 to 2019.
What If…Hydraulic Fracturing Were Banned? (2020 Edition)
This study from the Global Energy Institute at the U.S. Chamber of Commerce says a ban on fracking in the United States would be catastrophic for our economy. Their analysis shows that if such a ban were imposed in 2021, by 2025 it would eliminate 19 million jobs and reduce U.S. Gross Domestic Product by $7.1 trillion. Tax revenue at the local, state, and federal levels would decline by nearly a combined $1.9 trillion. Natural gas prices would leap by 324 percent, causing household energy bills to more than quadruple. By 2025, motorists would pay twice as much at the pump for gasoline as oil prices spike to $130 per barrel, while less domestic energy production would also mean less energy security.
America’s Progress at Risk: An Economic Analysis of a Ban on Fracking and Federal Leasing for Natural Gas and Oil Development
The study from the American Petroleum Institute (conducted by economic modeling firm OnLocation) warns that banning federal leasing and fracking on public and private lands, which some presidential candidates have proposed, would cost up to 7.5 million American jobs in 2022 alone, lead to a cumulative GDP loss of $7.1 trillion by 2030, slash household incomes by $5,400 annually, increase household energy costs by more than $600 per year and reduce farm incomes by 43 percent due to higher energy costs. If a ban is enacted, the U.S. would flip from being a net exporter of oil and petroleum products to importing more than 40 percent of supplies by 2030.
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
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.
Impacts of the Natural Gas and Oil Industry on the U.S. 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
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.
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
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.
Tim Benson (firstname.lastname@example.org) is a policy analyst with The Heartland Institute.