Natural Gas Silently Better on Our Pocketbooks
Just the other day, It cost me $76.68 to fill up the gas tank of my Ford Explorer. Like a lot of people, I sighed, shook my head and helplessly lamented the cost of gasoline and went about my day.
I may have felt better had I known that thanks to falling natural gas prices, I partially recouped the cost of filling my tank.
Dr. Mark Perry explains in his latest piece for the American Enterprise Institute, that “US households saved billions in 2012 from falling natural gas prices, partially offsetting higher gasoline prices.”
It’s just more difficult for us to see the savings in our day-to-day lives:
“…we don’t hear a lot of news about falling natural gas prices for residential consumers, probably because the prices we pay for natural gas aren’t as obvious and visible as the prices we pay for gasoline, which are prominently displayed at every gas station in America.”
If you’re still scratching your head, the chart may make a little more sense to those of us who pay energy bills. Perry says we spent less on natural gas to heat our homes and water last year, than in any year since 1999.
Perry goes on to say a big reason for this is the shale gas revolution:
“Based on the estimated natural gas purchased by residential consumers in 2012, American households last year saved about $17 billion in lower natural gas bills, compared to the residential gas prices that prevailed in 2008 before the shale revolution got started.”
What does that mean if you put in gas station terms?
Prof. Perry says that in 2008 the natural gas price we pay to heat our homes and cook our food peaked at $13.89 per thousand cubic feet. But a couple of months ago (November 2012), it had fallen all the way down to $9.97.
Quite a big drop, but we don’t notice so much because we don’t see it register like we do on the gas pumps when we fill our cars. Remember that $76.68 tab to fill my Explorer? If gasoline prices were to drop over the next four years like natural gas prices have since 2008, then I’ll only be forking over $55.03 whenever I need to feed the Explorer.
I’d save enough with each fill-up to feed lunch to myself and a friend.
Find a regular stream of good content like this at Prof. Perry’s Carpe Diem blog.
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Gasoline has gone up 20 cents a gallon the past day, 30 cents the past 2-3 days. It is more than twice as much as when this president took office. You don't think that he would want to try to do the same thing to natural gas as well?