Low gasoline prices saved the average U.S. household about $1,000 dollars in 2015, according to a new report by the American Automobile Association (AAA).
AAA found that lower gasoline prices saved U.S. consumers $115 billion in total, which equates to about $550 per licensed driver. The average U.S. household saved approximately $1,000 last year compared to 2014 when oil prices were higher.
One of the main causes of low gas prices is the boom in hydraulic fracturing, which helped tank the price of crude oil in 2014.
“AAA reports growing oil supply drove down gasoline prices last year,” James Taylor, president of the free market Spark of Freedom Foundation, wrote about the report in Forbes. “Economists point out that substantial increases in U.S. oil production, made possible by hydraulic fracturing (fracking), are the primary reason oil supplies have grown and prices have fallen. More than any other factor, fracking added approximately $1,000 to each household’s disposable income last year.”
Economists say families could have spent those savings on better education, health care, housing, and other goods and other services to raise their living standards. The national average price of gas was $2.40 per gallon in 2015, which was the second cheapest annual average of the past ten years. Drivers spent an average of 94 cents per gallon less on gasoline than in 2014.
Federal government data backs the AAA report’s claims.
Cheap oil and natural gas, largely from fracking, lower the annual cost of living for the average American by almost $750, according the Energy Information Administration (EIA). Fracking natural gas helped slash energy prices 41 percent over the course of 2015, according to EIA.
Some environmentalists oppose fracking despite these savings, citing concerns that it could contaminate groundwater and that the development disrupts local ecosystems.
A ban on fracking could kill 14.8 million jobs and cost the average American family $4,000 dollars, according to a new report by the U.S. Chamber of Commerce.
Were environmentalists to successfully ban fracking this year, 3.9 million jobs would instantly evaporate, rising to 14.8 million jobs lost by 2022. Gasoline prices would almost double as would electricity prices. U.S. household incomes would fall by $873 billion.
The new jobs and savings are good news for the economy. When the price of energy decreases, the cost of goods and services produced decline as well. Any product that is transported to market via truck or car uses gasoline and virtually every service uses electricity. Thus, low energy prices effectively reduce the price of almost everything.
This is especially great news for the poor, who tend to spend a higher proportion of their incomes on energy.
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