WASHINGTON, D.C. — Over the past decade, the shale revolution in America has transformed our economy and reduced our emissions. Now, a new study from the U.S. Chamber’s Global Energy Institute quantifies just how much America stands to lose if some candidates succeed in ending it.
The study comes as presidential candidates and activist groups have called for a ban on hydraulic fracturing—the technology that has made this energy revolution possible. Several major candidates have promised to pursue such a ban if elected, and the results would deliver a staggering blow to the economy.
The analysis found that a ban on fracking would eliminate 19 million jobs between 2021-2025, while reducing U.S. Gross Domestic Product by $7.1 trillion over the same period. Energy prices would skyrocket, with natural gas prices rising by 324 percent, causing household energy bills to quadruple and the cost of living to increase by $5,661 for the average American. By 2025, the price of gasoline would double and government revenues would plummet by almost $1.9 trillion.
In addition to the economic boon, the rise of fracking has helped improve the environment. The report notes that carbon dioxide emissions have been reduced by more than 2.8 billion metric tons since 2005—roughly the equivalent of annual emissions from Australia, Brazil, Canada, France, Germany and the United Kingdom combined.
“Increased oil and gas production driven by hydraulic fracturing has been fueling America’s sustained period of growth over the past decade, while making us both cleaner and stronger,” said Marty Durbin, president of the U.S. Chamber’s Global Energy Institute. “Our study shows that banning fracking would have a catastrophic effect on our economy, inducing the equivalent of a major recession and raising the cost of living for everyone across the country. This bad idea should be abandoned.”
The report is the first in the 2020 edition of GEI’s “Energy Accountability Series,” which takes a substantive look at what could happen if energy proposals from candidates and interest groups were actually adopted. The study is titled “What If Hydraulic Fracturing Was Banned? The Economic Benefits of the Shale Revolution and the Consequences of Ending It.” The 2020 edition updates a study first done in 2016 with new data and analysis, and several new states.
The study uses the well-known and widely used IMPLAN input-output model that tracks monetary transactions within the economy between different industries, the government and households. The report provides national impacts of a fracking ban, as well as state-specific impacts for five energy producing states—Colorado, New Mexico, Ohio, Pennsylvania, and Texas, and two states with limited energy production, Michigan and Wisconsin.
Of particular note, due to the devastating economy-wide impacts of a fracking ban, residents in Michigan and Wisconsin would experience similar levels of hardship as those in energy-producing states. For instance, the cumulative cost of living increases for a residential consumer from 2021-2025 is almost as great in Michigan ($5,170) and Wisconsin ($4,777), as it is in Ohio ($5,625), Pennsylvania ($4,654), Colorado ($6,490), Texas ($7,280), and New Mexico ($5,790), demonstrating the impact of a fracking ban on manufacturing and the overall U.S. economy.
The complete results of the report, including a detailed explanation of the methodology, are available here.