The massive increase in domestic shale development, led by hydraulic fracturing (“fracking”), has caused natural gas prices to plummet in Colorado, according to a recent report from the Consumer Energy Alliance (CEA). Consequently, Centennial State residents and businesses saved almost $12.4 billion from 2006 to 2016.
In 2016, natural gas prices were 30 percent lower in Colorado than 10 years prior, leading to $4.3 billion in savings over that period for residential consumers, or $767 per person. This is significant because roughly 560,000 Coloradans live in poverty, and the average Colorado resident at or below the poverty line spends around a third of their take home pay on energy costs. Commercial and industrial consumers also saved $8 billion.
“The economic benefits of the oil and gas industry can be felt across the state – supporting jobs in 50 of Colorado’s 64 counties,” the CEA report notes. “In 2014, Colorado producers contributed almost $1.2 billion to the state’s coffers via property, income and severance taxes in addition to public land leases and royalties. This money goes to funding public safety, streets and highways, our state’s schools and other projects that benefit communities statewide … Over the last 10 years, the Colorado State Land Board, which administers surface land and subsurface mineral rights for state-owned land, has distributed $1.4 billion in revenue from energy development to build and support Colorado public schools.”
Additionally, the oil and natural gas industries supported more than 232,000 jobs in Colorado in 2015, producing over $23 billion in labor income and $31 billion in economic impact, according to a 2017 American Petroleum Institute study prepared by PricewaterhouseCoopers.
“Colorado has fast become one of America’s leaders in safe, economical oil and natural gas production, rejuvenating communities statewide and helping families and businesses of all sizes reduce expenses, growth and prosper via abundant sources of locally-made, affordable energy,” said CEA Executive Vice President Andrew Browning in an accompanying press release.
It should come as no surprise that shale development is spurring economic growth across Colorado. Hydraulic fracturing activity 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.
Hydraulic fracturing 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, Colorado policymakers should refrain from placing unnecessary burdens on the natural gas and oil industries, which are safe and positively impact the Centennial State’s economy.
The following documents provide more information about hydraulic fracturing and fossil fuels.
The Importance of Affordable and Abundant Oil and Natural Gas for Colorado
This report from the Consumer Energy Alliance examined how the shale revolution across Colorado has provided benefits to Centennial State residents by boosting disposable income and revitalizing communities, saving residential users $4.3 billion, and commercial and industrial users $8 billion.
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 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.
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.
Local Fiscal Effects of a Drilling Downturn: Local Government Impacts of Decreased Oil and Gas Activity in Five U.S. Shale Regions
This study from Resources for the Future finds 82 percent of communities in the five largest shale regions in the United States experienced a net fiscal benefit from hydraulic fracturing despite a large drop in oil and natural gas commodity prices starting in 2014.
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.
What If … Hydraulic Fracturing Was Banned?
This is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.
What If … America’s Energy Renaissance Never Happened?
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have ever been created and $548 billion in annual GDP would have been lost since 2009. The report also found electricity prices would be 31 percent higher and gasoline prices 43 percent higher.
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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