Looking at the first quarter GDP numbers shows that shale gas and the much lower natural gas prices resulting from it prevented the economy from going into a recession in the first quarter. Consumers are straining to pay an additional $750 per year for gasoline, and that strain slowed the economy.
Yet, but for shale gas, many consumeers would have faced as much as another $1500 in additional natural gas heating costs and electricity costs. Another $1500 of energy costs would have tipped us into recession.
First quarter GDP numbers show the American economy growing in the first quarter of 2011 but at a slower rate than in the 4th quarter of 2010. Growth decreased to 1.7%.
Budget cuts, bad weather, and oil price increases all slowed economic growth in the first quarter.
But how much worse would the economy be if shale gas supplies had not driven down the price of natural gas?
If consumers were paying the July 2008 natural gas price of $13 for a thousand cubic feet, the 51% of consumers who heat with natural gas would have paid about $800 more in natural gas bills this last year.
Electricity prices would also be much higher as 24% of electricity is made from gas, and natural gas is often the marginal price fuel setting the price for the wholesale market.
Conservatively, if natural gas prices were at $13 for a thousand cubic feet, residential electricity consumers would be paying another 5 cents per kilowatt-hour or another $500 per year.
But for shale gas up to another $1500 of additional energy costs would have been piled on the additional $750 of higher gasoline costs. And we would be seeing a shrinking economy and rising unemployment.