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Wednesday, June 27, 2012

STUDY: Switching To Natural Gas Adds $26 Billion To The US Economy

Replacing 1 million bbls per day of crude oil with the 6 billion cubic feet (bcf) equivalent of natural gas would generate approximately $25.6 billion of consumer surplus for the US economy over one year.

So concludes a group of energy analysts calling themselves the Yale Graduates in Energy Study Group in a recent paper.

This is how they got there (don't worry, it's pretty basic arithmetic):

Gas wellhead price of $5/mcf, multiplied by 6 to get a per bbl of oil equivalent (“boe”) of $30 of cost, the savings is $70/bbl ($100/bbl - $30/boe).
Current US consumption of crude oil is approximately 15.0 million bbls per day.
If you replace 1 million bbls per day of crude oil with the 6 billion cubic feet equivalent of natural gas annually ($70/bbl X 1 million bbls X 365 days), you get $25.6 billion.
This isn't necessarily the best news for producers. But for consumers, it doesn't get much better.

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