Study: Shale Energy Benefits Schools, State and Local Governments

Mark Green
Posted June 5, 2014

A new study details the way America’s unconventional energy revolution – oil and natural gas safely developed from shale and other tight-rock formations with advanced hydraulic fracturing and horizontal drilling – is benefiting Americans where they live.

The new analysis by IHS shows that electricity and natural gas cost savings from shale energy is, in turn, saving billions of dollars for the nation’s school districts and state and local governments. Key points in the state-by-state study:

• U.S. public elementary and secondary schools saved $1.2 billion during the 2012-2013 fiscal year from a 9.3 percent reduction in electricity costs and a 21.3 percent reduction in natural gas costs – both linked to shale energy. That’s enough to employ more than 14,200 teachers.
• State and local governments realized $720 million in energy cost savings due to shale energy – enough to employ nearly 11,000 government workers.

Kyle Isakower, API vice president for regulatory and economic policy, discussed the study during a conference call with reporters:

“Today’s report shows that for cities and schools still struggling with the ripple effects of a recession, the economic benefits resulting from new advances in U.S. energy production are making a huge difference. Higher energy production has helped to push down the cost of keeping our students warm and local governments running. And it has given local taxpayers the freedom to set aside more funding for education and local services, like housing and safety.”

Last year, a related report by IHS estimated that the full value chain from unconventional energy supported more than 2 million jobs in 2012 and is projected to support nearly 4 million by 2025. For the average U.S. household, the increase in disposable income resulting from new production totaled $1,200 in 2012 and is expected to grow to $3,500 in 2025.

IHS also estimated savings for individual states and regions. In Colorado, for example, the state’s schools saved about 9.5 percent on energy last year or about $11 million. Colorado taxpayers saved another $6.6 million in lower energy costs for other state and local government functions. New York realized even larger savings, the IHS report found: nearly $134 million saved by the state’s public schools and more than $57 million saved by state and local governments. Karen Moreau, executive director of the New York State Petroleum Council:

“The oil and natural gas revolution isn’t just supporting manufacturers, it’s helping to keep costs down for New York schools and government offices. … For New York taxpayers, these energy savings can mean more funding for education and local services.”

Regionally, the greatest savings IHS found were in the Middle Atlantic – New York, New Jersey and Pennsylvania – where schools and state and local governments saved more than 14 percent on their energy bills as affordable and accessible natural gas countered cold climate conditions.

The benefits of America’s unconventional energy surge are national, regional, state and local. Job creation, economic stimulus and cost savings that help individual taxpayers are elements in a great-news story. It can continue, but only with increased access to domestic reserves and a common-sense approach to regulation.

Unfortunately, while the administration embraces the benefits of accessible, affordable natural gas – as well as recent growth in U.S. crude oil production, again, from fracking – its energy policies are potential hindrances to America’s energy renaissance.

API President and CEO Jack Gerard also participated on the conference call and noted that oil and natural gas production on federal lands fell significantly from 2009 to 2013, yet the U.S. Bureau of Land Management is working on new regulations that would further discourage unconventional development on federal lands. Gerard said at least 12 separate federal agencies are involved in some kind of review or rulemaking that could negatively impact hydraulic fracturing. Gerard:

“To achieve our full potential as an energy superpower, Washington must turn aside these efforts that would impose duplicative regulations on shale development, hold back job creation and limit access to domestic resources. A truly all-of-the-above strategy from this administration must embrace all forms of energy and help us to harness the full job-creating power of America’s bountiful resources and technological innovation.”