Many have probably noticed that gas prices have been steadily falling over the past year. The cost of gasoline is not only down 34% since June but it has fallen to a five year low. Politicians on both sides of the aisle love to take and shed responsibility for the rise and fall of gasoline prices but no one political party has much control over the general ebb and flow. There is, however, one major reason as to why Americans are getting a break at the pump.
This controversial form of drilling, also known as hydraulic fracturing, has revitalized several regional economies and helped the country significantly increase its crude oil output. The U.S. Energy Information Agency (EIA) predicts that the ability to tap into previously inaccessible oil and gas reserves will result in an annual yearly oil production increase of almost 1 million barrels per day from 2014 to 2015. Put very simply, the more oil there is, the lower the cost.
To most people, the highest oil output since 1972 probably seems like a positive thing. But there are many environmental activists who vehemently oppose fracking because of safety concerns. The argument revolves around the belief that fracking negatively affects water and air quality. That concern is not supported by the vast majority of studies including a recent report from scientists at Duke and Ohio State University who maintain that when done correctly, fracking is a safe way to extract oil and gas. That is not to say that harming the environment is impossible, just highly unlikely if monitored efficiently. The State Health Department of New York also came to the conclusion that fracking was safe despite strong opposition from environmental groups.
The environmental impact of fracking may be in doubt but the positive economic effect is unquestionable. Look no further than Fargo, ND which is a city where the GDP growth rate is greater than China. The unemployment rate in Fargo is the lowest in the nation at 3.2%. The economic success is entirely due to the energy boom that has put Fargo in a position where they have more jobs than they know what to with, many starting at $70,000 a year for an entry level position. As expected, this increase in high paying jobs has translated into a strong housing market and a robust overall economic climate in Fargo. Jobs have also been roaring back to “Rust Belt” towns like Canton and Youngstown in northern Ohio. It is believed that 1.7 million fracking jobs have already been created with a total of 3.5 million anticipated to be gained by 2035. There is no denying this influx in jobs has been a major benefit to a struggling American economy that is suffering from the lowest labor participation rate in over 30 years.
There are of course other factors involved in the cost of gasoline such as unrest in the Middle East, seasonal factors, and OPEC, but the energy boom in America is no doubt helping our economy and providing relief to Americans at the pump during a time when they really need it. That is a good thing no matter how you slice it.
– Andrew Mark Miller