The Pro-Consumer U.S. Energy Revolution
Posted April 9, 2019
America’s energy revolution is decidedly pro-consumer. Indeed, surging U.S. natural gas and oil production has significantly helped individual Americans and their families with their budgets, plan travel and more.
We’ll go mostly visual to absorb this – in a handful of charts from API’s Quarterly Industry Outlook, prepared by Chief Economist Dean Foreman. First, household spending on energy as a percentage of total spending:
Think of it like this: In a household budget that includes all kinds of costs, the spending on energy – for heating, cooking, fuels and electricity – as a percentage of total household spending has been at its lowest point in more than a decade.
America’s natural gas and oil resurgence has played a major role in that when you think about the average family’s needs for driving, home heating and keeping the lights on (remembering that natural gas is the leading U.S. fuel for power generation).
It follows, then, that families spending less on energy had more of their disposable income available for other needs. Which leads into the second chart:
Between 2007-2017, household energy spending fell 10.5 percent, while expenditures for health care (up 72.7 percent), education (+57.8 percent) and food (+26 percent) increased significantly.
We’d argue that thanks to the U.S. natural gas and oil revolution, Americans have been helped in meeting other budget priorities. Indeed, as this third chart shows, energy spending in 2016 was more than $300 billion less than in 2010 (adjusted for inflation) – in large part because of America’s energy revolution:
A couple more. Prolific domestic natural gas production lowered natural gas prices and decreased price volatility. While prices peak during winter months, those peaks since about 2009 were significantly lower than in previous years, and again, U.S. consumers were helped:
Let’s talk infrastructure. Americans all across the country should benefit from the country’s natural gas abundance, and this is largely dependent on sufficient pipeline infrastructure. The chart below shows how pipeline connections contributed toward lower prices at natural gas hubs in the East – especially as Pennsylvania and Ohio became major natural gas producers from the Marcellus and Utica shale plays:
Unfortunately, that benefit hasn’t been shared in New England, which has failed to expand its pipeline infrastructure (which we’ve discussed here and here). This disparity between New England and other parts of the country is mostly self-imposed – policies and political agendas that have blocked pipeline construction and expansion.
Industry is ready to do its part to meet America’s energy infrastructure needs. API President and CEO Mike Sommers talked about infrastructure and job growth at this week’s National Building Trades Legislative Conference:
“We’re producing more energy in more places than ever before. This welcome shift requires infrastructure, and building that infrastructure creates jobs. Our research shows that building the infrastructure we need to keep pace with record energy production can support up to 1 million-plus jobs per year – jobs building pipelines, and jobs transforming natural gas import facilities into export terminals. … Access to affordable energy is key to adding manufacturing jobs, and revitalizing communities, in state after state.”
We'll close with on a high note: U.S. energy production, which has produced the benefits detailed above, continues to soar.
The U.S. Energy Information Administration’s latest Short-Term Energy Outlook estimates U.S. crude oil output averaged 12.1 million barrels per day (b/d) in March, up 0.3 million b/d from February’s average. EIA forecasts that production will average 12.4 million b/d in 2019 and 13.1 million b/d in 2020.
More U.S. oil entering the global crude market puts downward pressure on the price of crude, which is the chief factor in gasoline and diesel prices at the pump. More good news: EIA projects that U.S. regular gasoline retail prices will average $2.76 per gallon for the upcoming summer driving season – down from last summer’s average of $2.85.
Thanks, U.S. energy.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.