Research & Commentary: Fracking Revolution Saved Illinois Residents and Businesses $24 Billion Over Past Decade
Residential Consumers Saved $11 Billion, Commercial And industrial Consumers Saved $13.8 Billion
The massive increase in domestic shale development, led by hydraulic fracturing (“fracking”), has caused natural gas prices to plummet in Illinois, according to a report from the Consumer Energy Alliance (CEA). Consequently, residents and businesses in the Land of Lincoln saved more than $24 billion from 2007 to 2017.
In 2017, residential natural gas prices were one quarter lower in Illinois than 10 years prior, leading to $11 billion in savings over that period for residential consumers, or a $876 savings for every single resident of the state. This is significant because roughly 1.6 million Illinoisans live in poverty, and the average Illinois resident at or below the poverty line spends about a quarter of their take home pay on energy costs. Additionally, commercial and industrial consumers saved $13.8 billion during the same period.
“This report demonstrates how Illinois’ families, farmers and small businesses benefit from an all-of-the-above energy strategy that continues to emphasize the importance of natural gas in benefiting Illinois – especially during these uncertain economic times for our communities,” said CEA Midwest Director Chris Ventura in an accompanying press release.
“Even during our recovery from the global pandemic, we are still seeing activists attack and try to stop natural gas use without providing any real alternative or solution to meet their energy needs,” Ventura continued. “It’s a false choice to assert that we can only have energy development or environmental stewardship – natural gas use is driving down consumer costs and helping us lower our emissions footprint at the same time. We need to stop picking winners and losers and instead support U.S. energy in all forms while we continue to advance our environmental standards – it’s key to us being prepared and having the energy we need.”
Moreover, the oil and natural gas industries supported more than 234,000 jobs in Illinois in 2015. These vital industries produced more than $14.8 billion in labor income and accounted for $33.3 billion in economic impact, according to a 2017 American Petroleum Institute study prepared by PricewaterhouseCoopers.
It should come as no surprise that shale development is spurring economic growth throughout Illinois. Fracking delivers $1,300 to $1,900 in annual benefits to local households, including “a 7 percent increase in average income, driven by rises in wages and royalty payments, a 10 percent increase in employment, and a 6 percent increase in housing prices,” according to a December 2016 study conducted by researchers at the University of Chicago, Princeton University, and the Massachusetts Institute of Technology.
Fracking enables the cost-effective extraction of once-inaccessible oil and natural gas deposits. These energy sources are abundant, inexpensive, environmentally safe, and can ensure the United States remains a leading energy producer well beyond the twenty-first century.
Therefore, Illinois policymakers should refrain from placing unnecessary burdens on the natural gas and oil industries, which are safe and positively impact the Prairie State economy.
The following documents provide more information about hydraulic fracturing and natural gas.
Powering the Way for a More Vibrant Illinois
This report from the Consumer Energy Alliance examined how the shale revolution across the United States has provided benefits to residents of Illinois by boosting disposable income, revitalizing communities, and saving residential users $11 billion and commercial and industrial users $13.8 billion from 2007 to 2017.
What If…Hydraulic Fracturing Were Banned? (2020 Edition)
This study from the Global Energy Institute at the U.S. Chamber of Commerce says a ban on fracking in the United States would be catastrophic for our economy. Their analysis shows that if such a ban were imposed in 2021, by 2025 it would eliminate 19 million jobs and reduce U.S. Gross Domestic Product by $7.1 trillion. Tax revenue at the local, state, and federal levels would decline by nearly a combined $1.9 trillion. Natural gas prices would leap by 324 percent, causing household energy bills to more than quadruple. By 2025, motorists would pay twice as much at the pump for gasoline as oil prices spike to $130 per barrel, while less domestic energy production would also mean less energy security.
America’s Progress at Risk: An Economic Analysis of a Ban on Fracking and Federal Leasing for Natural Gas and Oil Development
The study from the American Petroleum Institute (conducted by economic modeling firm OnLocation) warns that banning federal leasing and fracking on public and private lands, which some presidential candidates have proposed, would cost up to 7.5 million American jobs in 2022 alone, lead to a cumulative GDP loss of $7.1 trillion by 2030, slash household incomes by $5,400 annually, increase household energy costs by more than $600 per year and reduce farm incomes by 43 percent due to higher energy costs. If a ban is enacted, the U.S. would flip from being a net exporter of oil and petroleum products to importing more than 40 percent of supplies by 2030.
Debunking Four Persistent Myths about Hydraulic Fracturing
This Heartland Institute Policy Brief by Policy Analyst Timothy Benson and former Heartland communications intern Linnea Lueken outlines the basic elements of the fracking process and then refutes the four most widespread fracking myths, providing lawmakers and the public with the research and data they need to make informed decisions about hydraulic fracturing.
The Local Economic and Welfare Consequences of Hydraulic Fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, $1,300 to $1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.
Impacts of the Natural Gas and Oil Industry on the U.S. Economy in 2015
This study, conducted by PricewaterhouseCoopers and commissioned by the American Petroleum Institute, shows that the natural gas and oil industry supported 10.3 million U.S. jobs in 2015. According to the Bureau of Labor Statistics, the average wage paid by the natural gas and oil industry, excluding retail station jobs, was $101,181 in 2016, which is nearly 90 percent more than the national average. The study also shows the natural gas and oil industry has had widespread impacts in each of the 50 states.
The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.
Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).
The Social Benefits of Fossil Fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
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