Even though there is no consensus on the overall environmental effect of these processes, a recent study shows their economic impact by estimating the net benefits of the natural gas industry between 2007 and 2013. The paper points out that, in this period, shale gas extraction resulted in an increase in US natural gas production of more than 25 percent. This significant growth led to a sharp fall in prices—prices were cut almost in half when comparing the average of the past decade to that if the supply had not increased so abruptly. These supply and price changes had relevant distributional impacts. While estimating the benefits, the authors also note that environmental consequences must be taken into account for a comprehensive social welfare analysis in the US.
Consumers have seen the most benefits from shale gas extraction. Residential and industrial users’ natural gas and electricity bills have decreased. Among the states benefitting the most are those with intensive electric power consumption and a larger industrial sector, such as Texas and Oklahoma, and also those with colder weather, such as Illinois and Wisconsin. All industrial sectors benefit, as they are consumers of natural gas, at least indirectly through electric energy. Most industries transfer the lower cost of gas to final consumers…