Energy industry: Every household in America save an average of $1,000 because of fracking
Forbes recently described how lower energy prices can prove to be a boon for ordinary Americans. A recent study by the American Automobile Association (AAA) showed that Americans saved $115 billion in lower gasoline prices in 2016 as compared to 2014. That translates to $550 per licensed driver or an average of $1,000 per household. The extra money that wound up in Americans’ pockets was the result largely of hydraulic fracking, the technique that extracts oil and gas from shale formations by injecting fluid.
Interestingly enough, the study does not touch on lower utility costs thanks to a proliferation of cheap natural gas, also the result of fracking.
The fascinating aspect of the development was how unplanned it was. In the early part of this decade, many analysts thought the world had achieved peak oil supply. However, the development of fracking significantly added to the supply of both oil and gas, lowering the cost of energy, giving the United States a much-needed economic stimulus.
Going forward, thanks to the fossil-fuel-friendly policies of the new Trump administration, the prospect of cheap oil and gas is likely to continue for the foreseeable future. Advances in fracking technology, making the process cheaper, are likely to keep prices low, as well.
Renewable energy, mainly solar and wind, and electric cars are waiting in the wings, though, to provide competition to fossil fuels. As costs come down for renewables, oil and gas will likely come under increasing price competition, which will be a winner for consumers as well, as the past ages of energy scarcity are replaced with abundance