PRESIDENT Barack Obama often talks about programs to expand and strengthen the middle class. And he's right that a strong middle class benefits America by providing citizens with the ways and means to drive economic expansion.
While there are many government programs to promote the middle class, a Wall Street Journal
editorial noted that possibly the strongest program in recent years is not the result of government.
New drilling technologies and the resulting oil and natural gas boom are not only providing jobs, but also lower energy prices that help everyone, especially the poor.
Mercator Energy, an energy broker, examined data gathered by the U.S. Department of Energy.
"Thanks to the lower price for natural gas," the Wall Street Journal said regarding Mercator's study, "families saved roughly $32.5 billion in 2012."
The lower price of natural gas is due to greater supply. New fracking technologies have dropped the average price of natural gas from $7.20 per million BTUs five years ago to $2.80 in 2012.
"Mercator's most notable finding is that the income group helped the most by this bonanza is the poor, because energy is a big component of their family budgets," the Journal noted. "Data from the annual report of the federal Low Income Home Energy Assistance Program (LIHEAP) show that poor households spend four times more of their income on home energy (10.4 percent) than do non-poor households (2.6 percent)."
Nationwide, the report said, lower natural gas prices reduced the utility bills of poor families by $10 billion while the LIHEAP program helped about nine million low-income households with roughly $3.5 billion.
"To put it another way, fracking is a much more effective antipoverty program than is LIHEAP. Low gas prices benefit nearly all poor households, while LIHEAP helps fewer than one in four," the Journal said.
Besides lower energy costs, the gas boom has created an economic surge of new manufacturing, new jobs and new revenues. IHS Global Insight reports the boom added $283 billion in U.S. economic growth in 2012, including $74 billion in federal and state tax payments.
Still, the Journal notes that many green groups, in particular the Sierra Club, oppose fracking and are using lawsuits and political lobbying to stop it.
The Journal concluded: "No one is doing more to increase income inequality in America than the affluent environmentalists who oppose natural gas drilling."