Pennsylvania's Gas Decade: Insights Into Consumer Pricing Impacts From Shale Gas (2007–2016)

Summary of Study

Bottom Line: The shale natural gas boom in Pennsylvania since 2006 has transformed the state’s energy market and outlook, with implications for the country as a whole. Especially as compared to those at the national level, Pennsylvania’s gas prices have plummeted thanks to cheap and abundant supply. This presents an opportunity for the state to continually displace higher emission coal, supply other states, and lower energy costs for both residents and industry. If balanced correctly with the need for more infrastructure, low-cost shale gas can continue to lead to more economic development and jobs. Pennsylvania ultimately signals what could be for the U.S.: more low-cost energy and less imports.

Long dominated by coal, Pennsylvania has been at the forefront for the U.S. shale gas revolution that took off in 2006. The state’s gas output jumped 2,800% from 2006-2016. And Pennsylvania is now the second largest U.S. gas-producing state after Texas.

This rapid increase in gas production catapulted Pennsylvania from supplying less than 1% of total U.S. output in 2007, to over 16% in 2016. This has helped quickly reverse the fortunes of the U.S. gas market, from needing to build more import infrastructure, including LNG import facilities, to now looking to export a huge surplus of low-cost natural gas.

Pennsylvania’s shale revolution has also helped drastically reduce gas and electricity prices for the state’s consumers. In fact, Pennsylvania’s energy prices have now fallen significantly below the national average, the opposite of what was seen over the previous decade.

These lower prices from shale gas have benefitted residents and industry in Pennsylvania. This new demand has created the need to build more or expand existing pipeline infrastructure to bring growing gas volumes to interested customers. This presents a variety of challenges that need further examined, particularly on the environmental front.

Read the full study here.

Feature Charticle

Average Pennsylvania Area Hubs Spot Price Discount to Henry Hub ($/Mcf)

University of Pennsylvania

Findings: 

  • Thanks to the shale gas boom, Pennsylvania is now the second leading U.S. natural gas producer – with output rising a staggering 2,800% from 2006-2016. 
  • Abundant shale gas has drastically lowered energy prices for the state’s residents and businesses.
  • This has created a need for more infrastructure to transport and even export surplus supply – leading the country into uncharted territory.
  • There are still environmental and economic challenges, however, that need furthered examined as Pennsylvania’s shale boom marches on.

Read the full study here.