Thanks Fracking: Americans Saving Billions On Natural Gas


This chart from Mark Perry shows spending by US consumers on natural gas since 1999:


From Perry:

According to data from the Department of Energy, the US price of natural gas delivered to residential consumers in November 2012 was $9.97 per 1,000 cubic feet (most recent month available). Adjusted for inflation, that’s the lowest residential price of natural gas for the month of November in 13 years, since 1999, which further supports the BLS data on falling real natural gas prices. Likewise, the $8.01 price per 1,000 cubic feet paid by commercial consumers in November was the lowest inflation-adjusted price for November since 1999.

Just to put that into context, here’s natural gas price changes versus gasoline:


I was speaking with a reader recently about when the United States might begin to switch away from running transportation on gasoline and diesel to running on natural gas. There’s been a push for years to make it happen, but I don’t think the price points in the market place have ever quite reached the tipping point where a switch from natural gas to gasoline makes sense for your average consumer. That may be changing, specifically in commercial applications. FedEx, for instance, is weighing switching their delivery vans to natural gas, and container ships burning natural gas are already being built.

Natural gas prices are at rock-bottom lows now, but those low prices are also going to inspire changes in the way natural gas is consumed in our economy. As we’re using it for more things, that increased demand will drive prices back up and will create impetus for more production.

That transition will probably mean two things for private citizens. Either our gasoline prices will get cheaper as big consumers of fuel – commercial truckers, etc. – move away from the fuel, or it might begin to make sense for individuals to start buying cars that run on natural gas.

However it shakes out, this is just another of the many profound ways the energy revolution set off by innovations like hydraulic fracturing is touching our lives.