Early twenty-first-century advances in hydraulic fracturing, known as fracking, and drilling made possible a shale gas boom in the US that has saved ratepayers trillions of dollars on natural gas.
Ongoing shale gas extraction continues to save Americans more than $164 billion per year as production increases. By 2023, the US had become the world’s largest exporter of liquefied natural gas (LNG).
All of that is according to economic research by University of California, Berkeley business professor Lucas W. Davis. His paper, How Much Has Shale Gas Saved U.S. Consumers?, was published by the respected National Bureau of Economic Research in May.
The paper looks at how fracking turned America all the way around from being a net importer of natural gas to a net exporter of the fuel. Fracking disrupted established business routes in the process.
At the time when fracking brought more domestic natural gas online in 2007, several US ports had LNG import terminals under construction and many more were planning to build terminals to receive the fuel. Most of that became moot with increased domestic production.
Prices in America, Europe and Japan
Transporting LNG is not easy or cheap. Countries and regions that can get at a good domestic supply of natural gas have a leg up over places that have to import it. America currently enjoys a significant advantage with access to cheaper fuel compared to both Japan and European nations.
Before the advent of mass fracking, Americans paid basically the same price for natural gas as consumers in Japan and Europe. After fracking, the prices paid per Mcf – a standard unit of measure in natural gas pricing which means 1,000 cubic feet, or about 28.31 cubic meters – moved in very different directions.
“Every single month between 2007 and 2025, the U.S. price was below or equal to the price in Europe and Japan”, writes Davis, and the American price has usually been quite a bit below.
Before mass fracking, Americans were paying an average of $7.7 per Mcf to $8.5 in Japan and $7.3 in Europe. Since 2007, American prices have gone down to $5.3 per Mcf, and prices in Japan and Europe have gone up – to $16.1 and $14.4 per Mcf respectively.
Been There, Drilled That
Fracking faces some political opposition in the US. When Republicans chanted “drill, baby, drill!” at their 2008 national convention, it was seen as a provocation.
But at this point, many progressive Democrats have made a sort of peace with it. The Biden administration did a lot to hold back oil exploration, but about-faced and mostly let fracking be.
Now, Democratic Party activists have mostly moved on to protesting other outrages where their message has more resonance with the public, such as the construction of data centers to power AI.
That may be a wise pivot. Davis estimates fracking saves American ratepayers somewhere between $494 and $685 per capita annually on their natural gas bills.
At a time when the war-driven price of oil is top of mind, many folks can still warm themselves relatively cheaply thanks to this American success story.
