Energy boom a windfall for U.S. family income: study
NEW YORK (Reuters) - American families will earn more money in the coming years as dollars from the nation's oil and gas boom trickle down to the average person, consultants IHS said in a report released on Wednesday.
Robust energy production will increase wages, cut energy and manufacturing costs and add as much as $2,000 a year to each family's income by 2015, Colorado-based IHS said.
Last year, the average U.S. household earned $1,200 more because of the energy boom as oil and gas companies produced nearly 2 million barrels-per-day of oil using fracking and horizontal drilling technologies, the report said.
The rush has added 2.1 million jobs to the U.S. economy in 2012, both directly and indirectly, it said, and that number is expected to balloon to 3.3 million by 2020, a boon for an economy struggling with stubbornly high unemployment.
"This is a great story for jobs, for the tax base and now for the average household," said John Larson, a vice president of the firm that co-authored the report.
Still, fracking, the technology central to the boom, has been tied to environmental damage such as contamination of drinking water and minor earthquakes in the United States.
The process, which involves pumping sand, water and chemicals into rock formations at high pressure, is banned in some states, including New York, while its impact on health remains unclear.
"We all want good jobs for Americans but that shouldn't be at the expense of clean air, water or their health," said Amy Mall, senior policy analyst with the Natural Resources Defense Council in Washington D.C.
"The focus really needs to be on clean energy ... I think that's why you're seeing local governments restrict fracking," she added.
IHS expects families to save on energy bills as natural gas replaces other relatively expensive energy sources, such as coal, as the main source to heat homes and water. Some manufactured goods will also be cheaper as factories pay less for materials and power, according to the report.
Over the last four years, U.S. power companies have either shut down or switched some 16,000 megawatts of coal-fired power plants, enough to power 16 million homes, due to cheap gas prices and stricter environmental rules on coal use.
However, the U.S. Energy Information Administration expects some power companies to switch back to coal as natural gas prices climb next year.
The IHS report, the third and last in a series, includes associated industries like refining and chemicals manufacturing in its calculation of the economic benefits from the oil and gas industry.
Its projections are based on current market and legislative conditions where states are mainly responsible for regulating the industry. It assumes unconventional oil and natural gas output will average 3.9 million barrels per day and 57.9 billion cubic feet a day, respectively, by 2025.
Should mounting environmental concerns restrict production, however, shale output will be slashed by as much as 67 percent, according to the report.
IHS also expects two more natural gas export facilities to be approved in the forecast period, in addition to the three projects that have already received permits from the Obama administration.
(Reporting by Selam Gebrekidan; Editing by Maureen Bavdek and Dan Grebler)