Fracking Has Brought Electricity Prices Down By 50%

Much to the chagrin of environmentalists, who have this utopian vision of an America powered by solar panels and wind turbines, the process of hydraulic fracturing has opened whole new worlds of oil and gas energy supplies. So much so that our reserves can now be measured in centuries.

But what does that all mean for you? Well, one thing it means is cheaper electricity prices:

A shale-driven glut of natural gas has cut electricity prices for the U.S. power industry by 50 percent and reduced investment in costlier sources of energy.

With abundant new supplies of gas making it the cheapest option for new power generation, the largest U.S. wind-energy producer, NextEra Energy Inc. (NEE), has shelved plans for new U.S. wind projects next year and Exelon Corp. (EXC) called off plans to expand two nuclear plants. Michigan utility CMS Energy Corp. (CMS) canceled a $2 billion coal plant after deciding it wasn’t financially viable in a time of “low natural-gas prices linked to expanded shale-gas supplies,” according to a company statement.

Mirroring the gas market, electricity prices have dropped more than 50 percent on average since 2008, and about 10 percent during the fourth quarter of 2011, according to a Jan. 11 research report by Aneesh Prabhu, a New York-based credit analyst with Standard & Poor’s Financial Services LLC. Prices in the west hub of PJM Interconnection LLC, the largest wholesale market in the U.S., declined to about $39 per megawatt hour by December 2011 from $87 in the first quarter of 2008.

Everything in our modern economy runs on either oil or some form of electricity. Cheaper electrical prices means a lower cost of doing business which, in turn, means a healthier economy.

Ironically enough, as we head into the 2012 elections, President Obama may get more of a boost from energy abundance made possible by fracking, a process he and his fellow leftist brethren would like to ban, than any of his policies.

By the way, natural gas is a much cleaner form of electrical generation than coal, not that you could tell from the reaction of environmentalists.

Rob Port

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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