Pennsylvania consumers, who formerly paid more for natural gas than the national average, have enjoyed a bigger reduction in energy prices since the Marcellus Shale gas boom began a decade ago, according to a new report by the University of Pennsylvania's Kleinman Center for Energy Policy.
Residential gas prices have fallen 40 percent in the state since 2007, compared with 34 percent nationwide.
And the price of gas for Pennsylvania electric-power producers — the biggest buyers of natural gas — has fallen 79 percent over the decade, driving down electricity prices, according to the report presented Friday at the "Decade of Disruption" summit in Hershey, Pa., exploring the impact of the shale-gas boom on energy markets. The summit was organized by John Hanger, former Pennsylvania environment secretary.
Because of the drop in prices, customer debt to Pennsylvania gas utilities has fallen by $49 million, and utilities have terminated 79,000 fewer customers for nonpayment, according to the report, which was written by Christina Simeone, the Kleinman Center's director of policy and external affairs.
The "Pennsylvania gas discount" is attributed to the inability of pipeline builders to keep pace with gas production from Appalachian shale formations, causing a localized glut of gas.
But it may be short-lived. As more pipelines are built, the demand for Pennsylvania gas is likely to increase.
"This increase in demand has the potential to slow or reverse falling gas price trends and erode the Pa. gas discount," the report says.