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Shale Revolution Drives American Household’s Energy Cost To Record Low

Lily Emamian , Energy Indepth

Record-low natural gas prices enabled consumers to devote “less than 4% of their total annual household spending to energy in 2016, the smallest share ever recorded by the US government.

The Business Council for Sustainable Energy, in partnership with Bloomberg New Energy, just released the 2017 Sustainable Energy in America Factbook. The report covers the across-the-board benefits for the rise in natural gas use across the United States, with the most notable benefit being the fact that American consumers are now spending less of their incomes on energy than ever before in the modern era.

The factbook found that record-low natural gas prices enabled consumers to devote “less than 4% of their total annual household spending to energy in 2016, the smallest share ever recorded by the US government,” as the following chart from the report shows,

The factbook reports that retail electricity prices fell 2.2 percent from 2015 to 2016 and consumers paid 3.9 percent lower prices than a decade ago. These lower prices have been particularly advantageous to energy intensive industries, as the report notes,

“Exceedingly low natural gas and electricity prices have helped to reduce costs for industrial players, particularly those in energy-intensive sectors. Despite a surge in the value of the dollar over 2015-16, the United States remains among the lowest cost markets for electricity in the world for industrial customers, beating out other large countries such as China, India, Mexico and Japan.”

The report also highlights the fact that low natural gas prices have allowed the U.S. economy to grow at the same time as we’ve reduced greenhouse gas emissions — a previously unheard of decoupling trend. One reason, the report notes, is because of increased natural gas use for electricity generation. In fact, natural gas is now the top fuel source for electrical generation, which has driven U.S. CO2 emissions to their lowest levels since 1991,

“Within the power sector, the progress is even more noteworthy: in 2016, greenhouse gas emissions from US power plants dropped 5.3% in just one year. Since 2005, the power sector has shrunk its carbon footprint by 24% – in other words, the US is 75% of the way to the Clean Power Plan’s “32% by 2030” headline target, with 14 additional years left to go. In large part, this decarbonization is due to market forces: the boom in domestic natural gas production has provided the sector with a cheap, cleaner burning source of fuel (a natural gas combined-cycle plant emits roughly 60% less carbon than a coal-fired unit); additionally, renewable energy costs have fallen dramatically and corporations have captured cost-savings through energy efficiency measures.”

As the following chart from the factbook shows, natural as accounted for 34 percent of U.S. electrical generation in 2016 — up from 22 percent in 2007.

Theses trends, of course, are thanks to increased natural gas production and the development of better infrastructure throughout the country. The combination has given states and consumers better access to power from a variety of sources, from natural gas to electricity.

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