Appalachian Basin

*Update II* Fracturing Technology Lowering Energy Prices – Even In Areas It’s Not Used

** Cross-Posted at Energy In Depth

Try as some folks might, it’s just getting tougher and tougher to avoid/ignore/deny the reality of responsible shale development qua massive creator of jobs, revenue and American opportunity. Just this week, the Associated Press highlighted the significant employment gains being made right now in the Buckeye State — where natural gas development is re-invigorating the U.S. steel industry and pumping literally billions of dollars back into communities that could sure use the lift right now.

Of course, you could also look west to North Dakota, where the state is enjoying a nation leading 3.5% unemployment rate thanks to the development of the Bakken.  And as those development activities have continued across the country, another benefit is making itself known to the American consumer: significant cost savings in the form of lower energy bills.

In a recent article in the Buffalo News, Gary Marchiori, President of Energy Mark, a local energy services firm in upstate New York, summed this up quite succinctly stating:

Whether they realize it or not, consumers in the Buffalo Niagara region are benefiting from natural gas production in the Marcellus Shale every time they turn their furnace on.

Here, he’s talking about how the responsible development of the Marcellus Shale – and other tight reservoirs in the east – has had the effect of driving down natural gas prices across the entire country, reducing the cost of heating homes, cooking your food and manufacturing just about anything in the world that matters.

In New York, this trend is borne out in estimates for heating costs this year put forward by the National Fuel Company.  The company declared that the typical residential household will have winter heating costs of approximately $719 which is a $350 decrease from prices paid just two years ago.

Sounds nice right? Just to make sure, we thought we’d give Mr. Marchiori a call ourselves, having never spoken to the man previous to seeing him quoted in the newspaper. And guess what? Turns out Gary’s a great guy who knows a great deal about energy markets in western New York, and beyond. According to Gary:

Due to excess surplus from shale, you should have [natural gas] stored and retained throughout the year, keeping prices low well through next year.  Adding to this stability is presence of major natural gas producers, whose additional exploration and production can be expected to lead to a more predictable supply, thus removing significant market volatility and also helping to keep prices low for the consumer.”

Of course, these benefits are not limited to New York.  In fact, the UGI corporation, one of the largest utilities on the east coast providing natural gas to approximately 56,000 customers, also announced that it would be lowering its natural gas prices resulting in cost savings on average of 13.5% to residential customers. While a rate decrease of this magnitude may not seem significant, with this decrease natural gas costs for UGI customers will be about 27% less than they were just three short years ago.  This good news may just end up meaning an extra present or two below the Christmas tree this year in many homes thanks to cost savings brought about by shale development.

According to Vicki O. Ebner, Senior Vice President, Customer & Government Relations at UGI, this all attributable to the safe and responsible development of our nation’s shale resources:

The increase of supplies of natural gas from Marcellus Shale has helped create continued downward price pressure on natural gas. We are pleased to pass this cost savings on to our customers as we approach the winter heating season, especially in the midst of extreme price volatility for other energy sources. Now more than ever, natural gas is an affordable, efficient and reliable American fuel, and the energy source of choice for homes and businesses.

All of this comes on top of news released earlier this year from the Energy Information Administration (EIA).  EIA stated earlier this year that throughout the northeast, wholesale natural gas prices were down between 2% and 15% over the summer, reflecting both lower regional demands and growing natural gas production from the Marcellus Shale.

Benefits like these can’t be trivialized easily by those opposing natural gas development as it means the chance to breathe a bit easier for our nation’s neediest families. After all with announcements earlier this year indicating that  16 million U.S. children are living below the poverty level this year (highest level since 1962) we are pretty sure that many families appreciate cost savings wherever they can be found.  Thanks to natural gas development one place to look is your monthly utility bill.

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Update 1- December 1, 2011

Today, the Scranton Times Tribune also featured the cost-savings brought about thanks to Marcellus development.  The paper adds to this already great story, stating:

  • Those who heat their homes with natural gas will get a big break this heating season as rates plunge to their lowest level in more than a decade thanks largely to Marcellus Shale development
  • “The state’s Marcellus Shale production, still considered by many to be in it’s infancy, “can in 13 days meet UGI customers needs for an entire year” and “the shale gas has pulled down wholesale natural gas prices nationwide
  • One energy analyst interviewed for the article stated, “a few months ago I would have said prices couldn’t go much lower, but here we are with still lower prices”

Update II- December 2, 2011

The hits just keep on coming.  Today, the Des Moines Register confirmed that shale gas is significantly bringing down consumer prices of natural in the Hawkeye State and across the continental United States.  The article, titled “Natural Gas Story Warm and Fuzzy” highlighted the benefits shale development is bringing to folks in Iowa, among many other places.  Specifically informing Iowans that while they may be preparing for their first sub-freezing temperatures of the year staying warm may be just a bit less costly as:

the price of natural gas, the prime heating fuel in the state, is running at a five-year low thanks to expanded domestic production.

Iowa joins Pennsylvania, New York, Rhode Island (and just about all of New England for that matter) and countless other states enjoying reduced utility bills this winter thanks to the safe and responsible development of our natural gas resources.  As our nation continues to struggle with stubbornly high unemployment rates for many Americans struggling to make ends meet it is  likely comforting to know that staying warm will cost less and that continued production should keep this the case for some time.


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