Appalachian Basin

Shale Delivers Lower Home Heating Bills for Ohioans

Ohioans are now saving between 65 to 129 percent on their heating bills, according to a report from the Toledo Blade. Unfortunately, many folks living outside of eastern Ohio rarely understand how important increased oil and gas development is on their daily lives. That is, until it impacts their pocket books.

According to Columbia Gas of Ohio, January’s average residential heating bill will average between $142.19 and $146.19 for their 1.4 million residential customers.  This pales in comparison to the rates consumers would be paying if today’s prices resembled the market back in 2005 or 2006, before the local shale boom began in earnest. Applying the rates from January 2005 and 2006, customers would have been paying between $234.15 and $324.95 a month to heat their homes, meaning without shale, Ohioans could very well be paying more than twice as much to heat their homes.

These savings echo a 2012 report from Continental Economics, which showed Ohio consumers saved over $1.5 billion due to lower prices resulting from development of the nation’s shale plays, including the Utica.

The savings Columbia Gas of Ohio is providing its customers also reinforces an earlier IHS CERA study, in which researchers estimated lower natural gas prices will add an annual average of $926 per year in disposable household income between 2012 and 2015.  Following the article from the Toledo Blade, it seems those savings may have actually been conservative.

Not every state is benefiting from the same savings, though, and the key difference could be where development is and is not taking place.  For instance, the price of natural gas in New York City costs nearly nine times more than what consumers are paying in Ohio.  The state of New York has been under a moratorium on hydraulic fracturing for the past half-decade, and activists have also been successful in slowing down or even blocking construction of critical new pipeline capacity.

One would have to assume the low-income residents in New York City are not happy that their governor, Andrew Cuomo, refuses to move forward with shale development, based as it is on unsubstantiated fear tactics by those opposed to oil and gas development. The new mayor of New York City, Bill de Blasio — who ironically styles himself as a champion of the working class — has similarly come out against “fracking,” even as his city’s air quality is the cleanest it has been in fifty years, thanks in large part to natural gas developed from shale.

Meanwhile, back in the Buckeye State, consumers are paying a much lower prices than the national average. This was noted in the most recent Utica Shale Gas Monitor by Cleveland State University, which found:

Since shale production took off in Ohio during the third quarter of 2011, average prices for natural gas have remained below the national average. Between 2011 and 2012 the average Citygate price in Ohio fell from $5.46 to $4.62.  In 2013, this pricing trend accelerated and the gap in prices widened; Ohio’s Citygate prices were 85 cents lower than the national average and $1.12 lower for commercial consumers.” (emphasis added)

While the conversation regarding shale development tends to focus on jobs and the economy, it is difficult to overstate how important lower energy prices can be for working families and low-income households, making the cost savings from shale a story that’s absolutely worth telling.

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