These are exciting times in the natural gas industry here in Ohio and across the United States.  The last four years have brought plunging wholesale natural gas prices due to the combination of substantially increased supplies with only modest growth in demand.  The resulting low prices have created an enormous economic benefit for both gas customers and the overall economy.

Ohio is in a unique position to benefit from the production of oil, natural gas and natural gas liquids from shale formations thousands of feet below the surface.  The development of the Utica Shale is already under way in much of the eastern part of the state.  Much of this area is believed to be rich in high value hydrocarbons like butane, pentane, ethane and propane as well as oil.  Countless landowners have benefitted from lease and royalty payments.  Companies like MarkWest, Hess, Chesapeake Energy, Halliburton, and Caymen Energy are making enormous new capital investments in Ohio.  In what is a hopeful sign of things to come, the United Association of Plumbers and Pipefitters Local 396 recently reported that the union’s local went from nearly a 40 percent unemployment rate two years ago to nearly full employment this year.

Additionally Ohio has historically been a leader in manufacturing.  In recent decades many jobs in this field have been lost due to technology improvements, productivity gains as well as foreign competition.  In the last two years though, Ohio has actually seen an increase in manufacturing job creation at least in part due to higher demand for components of oil and natural gas production and distribution systems.  Companies like Timken Steel and Republic Steel for example have been hiring even in these difficult economic times.  With our natural gas prices near ten year lows and considerably cheaper than Asia and Europe, many Ohio manufacturers now have a huge competitive advantage.

Ultimately millions of Ohioans are already benefitting from shale development.  For the first time in many years, US oil production has increased.  The Bakken Shale alone now produces more oil each day than some OPEC member states.As a result, West Texas Intermediate crude oil prices are now typically $15-20 less per barrel than Brent North Sea crude oil.  This means US gasoline prices are actually lower than what they would be otherwise.  Falling natural gas prices are also having an impact on the US economy.  In May of 2012 the American Gas Association released a study showing:

•2010 gas bills were more than $175 lower for the average residential customer and more than $1,100 lower for the typical commercial customer compared to what the bills would have been using 2008 prices
•When all gas consumers are included, these savings totaled about $250 billion

The lowest natural gas prices in at least a decade due to the development of shale gas could ultimately have the economic effect of a massive, paid for (not borrowed) tax cut.  It would result in competitive advantages for many industries while giving consumers additional dollars to spend or invest.  Ultimately Ohioans and all Americans will benefit from that.

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