Obama Administration’s New Fracking Rules Hurt The Poor

  • Date: 24/03/15
  • Editorial, Investor's Business Daily

The administration’s new rules for hydraulic fracturing on federal lands will add to the cost of shale oil and gas drilling operations and hamper an industry that’s been front and center in the economic recovery.

Given this president’s allegiance to the environmental lobby, this may be the whole point of the new rules — to stop fossil-fuel development in order to make expensive renewable energy the only alternative.

But a new study from the Brookings Institution — hardly conservative in its orientation — suggests the biggest victims of these new rules will be the poorest Americans, who’ll have to pay higher energy costs.

Titled “Welfare and Distributional Implications of Shale Gas,” the study finds that the annual per-family savings from shale gas are in the hundreds of dollars.

“The shale gas revolution has led to an increase in welfare for natural gas consumers and producers of $48 billion per year,” Brookings concludes, while also acknowledging “more data are needed on the extent and valuation of the environmental costs of shale gas production.”

It also finds that the 47% decline in natural gas prices due to shale gas has meant the “residential consumer gas bills dropped $13 billion a year from 2007-2013, thanks to the fracking revolution, amounting to $200 per year for gas-consuming households.”

The biggest winners are those who live in the West South Central states — Arkansas, Louisiana, Oklahoma and Texas — with an average annual saving of $432 per person in consumer benefits, followed by East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin) with $259 per person in benefits.

Another study by John Harpole of Mercator Energy in Colorado finds that because the poor spend far more on utility bills than do the rich as a share of their incomes, “the poor benefit far more than the rich from the shale oil and gas boom.”

Harpole finds in his study that the fall in natural gas prices from 2007-12 translated to gains to poor households multiple times larger than the value of the $1 billion a year the feds throw at the Low Income Home Energy Assistance Program. In other words, the best way to keep the less fortunate warm in the winter is by allowing shale oil and gas drilling.

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