![]() Among them, the owners of scarce equipment and specialized labor accrued economic rents in the new wells. But, while all consumers of natural gas benefit, not all producers are harmed.įor example, for producers from states with large shale reserves, such as Arkansas or Pennsylvania, the increase in supply is high enough to more than compensate for the decrease in prices. ![]() Such investments made sense at the time, but now they do not. Among those especially impacted are producers that drilled wells prior to 2007, when the prices were much higher. pipeline construction, which is considered in the analysis of the producer surplus), the natural gas industry is on the losing end of low prices. Most industries transfer the lower cost of gas to final consumers.īesides the boost in associated industries (i.e. All industrial sectors benefit, as they are consumers of natural gas, at least indirectly through electric energy. Among the states benefitting the most are those with intensive electric power consumption and a larger industrial sector, such as Texas and Oklahoma, and also those with colder weather, such as Illinois and Wisconsin. Residential and industrial users’ natural gas and electricity bills have decreased. While estimating the benefits, the authors also note that environmental consequences must be taken into account for a comprehensive social welfare analysis in the US.Ĭonsumers have seen the most benefits from shale gas extraction. These supply and price changes had relevant distributional impacts. This significant growth led to a sharp fall in prices-prices were cut almost in half when comparing the average of the past decade to that if the supply had not increased so abruptly. The paper points out that, in this period, shale gas extraction resulted in an increase in US natural gas production of more than 25 percent. ![]() For instance, natural gas is a less carbon intensive source of energy (compared to coal and oil), so it is helping to reduce greenhouse emissions.Įven though there is no consensus on the overall environmental effect of these processes, a recent study shows their economic impact by estimating the net benefits of the natural gas industry between 20. However, some people argue that there are some environmental benefits of fracking. The main concerns are the potential risks of fracking, including methane leaks to groundwater and even a possible association with earthquakes. The official statement stated that prohibition “is the only reasonable alternative.” Other cities and counties have also embarked upon the same path. Just recently, New York State officially banned the use of hydraulic fracturing.
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