Earlier this month, the U.S. Energy Information Administration quietly published a new analysis showing that coal is no longer king. But it was not overthrown by force.
In both April and July of this year — in the latter case, despite projections to the contrary — America’s primary source for electricity generation was natural gas. In July, gas produced 35 percent of the nation’s electricity. Coal, which had long dominated, produced just 34.9 percent.
Year over year, in every region of the U.S., coal consumption fell and natural gas consumption rose, in some cases dramaticaly. Natural gas has become the main source of electricity in every region but two — the mid-Atlantic and what EIA calls the central states (Midwestern and Great Plains).
Coal emits roughly twice as much carbon dioxide per unit of energy as natural gas. Consequently, the Obama administration has long had it in for the coal industry, promising to crucify coal producers and acknowledging that their plans entail the removal of coal towns from the map.
But this shift to gas in U.S. electrical generation was afoot before the malignant bureaucrats had begun their meddling. It was not the result of any recent bureaucratic diktat, but rather of market forces and advances in fracking technology.
Just ten years ago, when the price of gas hovered at a level between three and four times what it is now, a U.S. senator described the use of natural gas for electricity as analogous to the use of bottled water to washing dishes. But in the time since, the shale revolution has helped bring down the cost of natural gas to the point that it is actually the cheaper option.
Markets work, and this shift to gas continues apace. Already, it has created dramatic reductions in carbon emissions far beyond what any bureaucrat could achieve. The shift to gas since 2005 alone has obviated the emission of more than a billion metric tons of carbon dioxide between 2005 and 2013 — far more than an entire year’s worth of carbon emissions from U.S. residential electricity use (773 million metric tons in 2013). It’s also a larger reduction than what was achieved during the same period through the growth of all non-carbon electricity sources combined.
So why not do both? An important difference between these reductions and those that come from coercive government schemes is that gas production does not distort markets and costs the taxpayer nothing. Private companies explore for and produce gas with their own investors’ money, then pay taxes from profits that would not otherwise exist.
The shale revolution is helping consumers benefit from low-cost energy. It is also employing hundreds of thousands of people, creating the potential for large new export markets and even reducing America’s carbon footprint.
And it is doing all of these things without slapping consumers with large rate increases and other negative consequences of government-generated market distortion. The fracking boom is a terrific example of how, as Milton Friedman would put it, free exchanges between free people can be mutually beneficial for all involved.
