Analysis: Cheap Energy Produced Through Fracking Has Saved a lot of Money for Public Schools

fracking
(wallstreetdaily.com)

Sooner or later, the environmentalists are going to have to admit that fracking, far more than green energy, has the short-term potential to make America less depending on foreign energy sources.

A new report shows that fracking saved public schools and local governments a combined $2 billion in energy costs last year.

The American Petroleum Institute, an oil lobbying organization, released an analysis late last month that puts the controversial drilling method into perspective by illustrating energy savings to schools and local governments tied to fracking, Businessweek reports.

“The report calculates that because of the abundant supplies of cheap energy unlocked by fracking, local elementary and secondary schools saved more than $1.2 bill off their combined gas and electricity bills during the 2012-13 school year – or enough money to hire 14,246 full-time teachers,” according to the news site.

“State and local governments saved a total of $720 million because of cheaper gas and electricity … enough to hire an extra 11,000 workers.”

API commissioned the report, which was conducted by energy consulting firm HIS, to show how much higher energy costs would be if it wasn’t for fracking. The analysis showed costs would be about 21 percent higher for gas and about 9 percent higher for electricity – assuming that the savings from fracking was passed on to consumers, Businessweek reports.

The news site’s associate editor, Matthew Phillips, points out some weaknesses in the report’s methodology – particularly the assumption that all cost savings get passed on – but concludes there is little doubt that fracking is keeping energy costs down.

“This strikes me as a tricky assumption to make, given the complicated interplay between wholesale and retail natural gas markets. Sometimes more than 100 percent of the wholesale price increase gets passed onto the retail market; sometimes it’s less than that,” Phillips wrote.

“There’s also a big disparity between regional wholesale prices, not to mention the range of retail natural gas prices that people pay across the country…

“Overall, though, it’s not crazy to think that fracking has saved schools and governments money off their energy bills. Determining how much is where the debate begins, especially since electricity prices have gone up over the past few years,” Phillips wrote.

The energy cost savings, however, is only one way fracking is helping school budgets. In Pennsylvania and Texas, public schools have turned to leasing school property to energy companies for fracking.

In 2011 the Blackhawk School District north of Pittsburgh agreed to lease 160 acres of school property to Chesapeake Energy at $2,000 per acre, with more than $300,000 upfront, Stateline reported at the time.

Chesapeake Energy released a report in 2011 “showing it paid more than $5 million (the previous year) in natural gas bonuses and royalty payments to eight Texas school districts.”

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