The decline in gasoline prices attributed to hydraulic fracturing (fracking) directly saved the average American driver $700 last year, and economy-wide benefits pushed the average American’s fracking-related cost savings to $2,000, according to an analysis published this week at The Federalist.
Average U.S. gasoline prices peaked at over $4 per gallon in early 2011, just before fracking unleashed greater oil production and lower gasoline prices. Compared to today’s gasoline prices, and multiplied by the average number of miles driven by the average American driver, the average driver saves $700 each year in direct gasoline costs due to fracking, Anders Ingemarson observes in The Federalist.
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Fracking’s benefits extend far beyond the direct savings a person realizes when filling up his or her gas tank. Fracking has had a similar impact on natural gas prices, reducing household electricity bills. The lower price of gasoline has reduced the price of airfare. And lower gasoline prices – and thus lower transportation prices – reduce the price of virtually every good and service bought and sold in the economy. Add it all up, and the average American receives a $2,000-per-year bump in his or her standard of living.
Two thousand dollars per year buys quite a bit of better education, better nutrition, better housing, better healthcare, and other goods and services that make life happier, healthier, and longer lasting. Perhaps, as Ingemarson suggests, the person most responsible for the fracking revolution – George P. Mitchell – deserves a posthumous Nobel Peace Prize.