Like any other average American, you probably only think about the cost of energy when you’re standing in front of a gas pump or thumbing through your monthly utility bill. But what most consumers don’t often consider is that our energy entails a series of costs and benefits, some of which are beyond our immediate control and most of which are hard to properly quantify. Energy production and consumption affects our economy, our environment, and our national security, all of which collectively affect our quality of life.
On the cost side of the equation, American consumers bear the expense of dependence on foreign energy as well as the costs of potential adverse environmental impacts from production. Due to our dependence on foreign oil for nearly half of our needs, we spent $435 billion spent to import 4.1 billion barrels of oil last year. Not to mention, American taxpayers incur the political and military costs of instability in key oil-producing regions. Consumers also pay for the costs when we fail to safely and responsibly produce and use energy in an efficient, environmentally friendly manner.
On the benefit side of the equation, American consumers have access to reliable supplies of energy that help us transport people, manufacture goods, light and heat our homes and businesses, and grow food. We also benefit from the millions of jobs and billions in revenue that domestic energy production generates for the American economy. Other indirect benefits should be considered, too: the ability to drive to places outside of walking distance or the ability to work at night in a lighted building – both of which wouldn’t be possible without energy and both of which have advanced the quality of our lives and the efficiency of our economy.
Attaching a monetary value to this equation isn’t easy and oftentimes doesn’t come with much certainty. Nevertheless, a group of graduate students at Yale University have done just that. In a new report on “The Arithmetic or Shale Gas,” the students analyze the costs and benefits that U.S. shale gas production has for American consumers. The report estimates that the increased supply of natural gas, thanks to expanded U.S. shale gas production, has led to significant price decreases for consumers on the magnitude of over $100 billion a year. However, the report considers the social and environmental costs that may incur if producers fail to adequately protect the environment. After accounting for these costs, the report concludes that the benefits significantly outweigh the costs, 400 to 1, for consumers.
While the economic benefits of our energy use may not exceed costs at a rate of 400 to 1 for all energy resources, the United States should strive for solutions that mitigate costs and increase benefits. We can increase domestic energy production, and we can demand that energy be produced in an environmentally safe manner.
We’ve entrusted our elected officials to balance the costs and benefits of energy production and consumption through rational, scientific-based and transparent management. With the November elections on the horizon, we must now call on all candidates to support safe, American energy production and all the benefits it can bring.