Report: Increased Shale Development Providing Significant Savings for U.S. Households

American families are saving a combined $203 billion annually in electricity costs thanks to increased natural gas and oil production, a new White House Council of Economic Advisors report confirms. These savings equate to approximately $2,500 per family each year, which means communities across the country are benefiting tremendously from affordable shale and the affordable resources it produces.

 Americans Save Big

New well production per rig increased more than eight-fold between 2007 and 2019 for key shale gas regions and by over nineteen-fold for key shale oil regions, lowering oil prices by 10 percent and preventing 63 percent higher natural gas prices, the report found. These low prices are 46 percent lower than what was projected in 2018 and resulted in significant savings that were felt by American families in several ways, according to the report:

  • 2,000 – Natural gas prices fell an incredible 63 percent from 2007 to 2018, representing $2,000 of the $2,500 in household savings identified in the report.
  • $500 – Lower oil prices impacted the cost of gasoline and heating fuels, helping to save consumers an additional $500.
  • 45 percent – The sharp decline in natural gas prices also provided indirect savings for consumers: Electricity prices declined 45 percent over this time period.

The study concludes that the benefits extend far beyond American families as well. Shale production has enabled the United States to surpass Russia and Saudi Arabia in natural gas and oil production, making the United States the world’s leading energy producer.

Low Income Households Experience Greater Benefits

Because low-income households spend a larger share of their income on energy bills, lower energy prices disproportionately benefit them: shale-driven savings represent 6.8 percent of income for the poorest fifth of households compared to 1.3 percent for the richest fifth of households. These consumer savings are in addition to economic benefits linked to greater employment in the sector. As CEA explains:

“In other words, lower energy prices are like a progressive tax cut that helps the poorest households the most.”


Not Everyone Gets to Enjoy These Benefits

While these benefits are impacting households across the United States, that isn’t the case everywhere. As the report explains:

“New York, for example, has banned shale production and stymied new pipeline construction. New York’s policies have led to falling natural gas production in the state, greater reliance on energy produced elsewhere, and higher energy prices. New York’s failure to approve new pipelines causes consumers in New York and New England to pay an estimated $2 billion more in energy costs each year, or $233 for a family of four.” (emphasis added)

The report compares New York with Michigan – another state in close proximity to the abundance of natural gas produced in the Appalachian Basin. As Figure 13 shows, as new pipelines came online that provided greater natural gas capacity in Michigan, the state’s natural gas price has dropped. In New York, however, where a blockade on new pipeline infrastructure continues, prices have risen.


Perhaps the biggest takeaway from the White House report is that the cascading cost-savings from shale production are only just beginning. CEA concludes that electricity costs are expected to continue on a steady decline as more natural gas power plants come online, meaning that Americans will have more money in their pockets for decades to come.

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