America's Energy Revolution Has Brought Lower Real Prices For Both Natural Gas And Electricity

 |  Includes: UNG
by: Mark J. Perry

(Click to enlarge)

One of the economic benefits of the shale gas revolution is the moderating effect that abundant, cheap shale gas has had on the price of electricity in the U.S. for all end-users: residential, commercial and industrial customers. The indirect cost savings for electricity customers from cheap shale gas are in addition to the significant and direct cost savings from inflation-adjusted gas prices for residential, commercial, industrial customers and electric utilities that are the lowest in a decade, and have saved natural gas users $250 billion over just the last three years.

The chart above shows average, annual, inflation-adjusted retail prices of electricity from 2001-2012 based on EIA data with the following results:

1. Residential consumers are paying an average price in 2012 (11.73 cents per kilowatt) that is the lowest since 2007 (see blue line in chart).

2. Commercial customers are paying an average price of 9.93 cents per kilowatt of electricity this year, which is the lowest commercial price since 2004, and a price that is slightly lower than in 2001, 2002, and 2003 (see red line in chart).

3. Industrial users are paying the lowest inflation-adjusted price for electricity this year (6.50 cents) than in any year since 2004, and the same real price as in 2001 (6.50 cents), 12 years ago.

MP: The shale revolution gets at least part of the credit for bringing inflation-adjusted electricity prices down over the last several years, which have likely generated millions, if not billions, of dollars of savings for households, businesses and industry. The American energy sector continues to be one of the brightest spots in the U.S. economy, and the shale revolution is at the forefront of that energy-driven stimulus to the economy. America's energy revolution has brought thousands of new high-paying jobs in the oil and gas industry, stimulated thousands of indirect jobs in energy support industries like fracking sand, and generated billions of dollars of savings for customers from lowering prices of natural gas and electricity.