Fracking Helps Poor More than Government Programs

The natural gas boom spawned by free enterprise and new technology is doing more to help the poor than LIHEAP, a decades-old welfare program, according to the Wall Street Journal.  At the same time the Journal reports that Germany’s so-called green energy programs are forcing consumers to pay well above market prices for electricity.

A study by Colorado-based energy broker Mercator Energy quantified savings produced by hydrofracturing and horizontal drilling techniques used in the Marcellus and shale deposits across the U.S.: 

From 2003-08, shortly before the fracking revolution took hold, the price of natural gas averaged about $7.20 per million BTUs. By 2012 after new drilling operations exploded across the U.S.— from West Texas to Pennsylvania to North Dakota—the increase in natural gas production had slashed the price to $2.80 per million BTUs.

Thanks to the lower price for natural gas families saved roughly $32.5 billion in 2012. (That’s 7.4 billion MMBTUs of residential use of natural gas times the $4.40 reduction in price.)  The windfall to all U.S. natural gas consumers — industrial and residential—was closer to $110 billion.

The Mercator study notes low natural gas prices help low-income families the most because they spend a larger share of their income on energy. Despite energy subsidies:

” . . . lower natural gas prices have still shaved $10 billion a year from the utility bills of poor families.”

By comparison, LIHEAP provided approximately $3.5 billion in home-heating subsidies to about nine million households in 2012, the Journal reports.  That is only 35 percent of the benefit from lower gas prices.

Meanwhile, government green energy mandates have Germans paying the highest electricity prices in Europe, the Journal says:

This year, Germans will be forced to pay 20 billion euros ($26 billion) for electricity from solar, wind and biogas plants—electricity with a market price of just over 3 billion euros…In the near future, an average three-person household will spend about 90 euros a month for electricity.  That’s about twice as much as in 2000.

Low-income Pennsylvanians are the biggest winners when politicians allow safe and affordable energy to be developed rathern than impose mandates designed to pad the pockets of green special interests.