STUDY: Switching To Natural Gas Will Put $26 Billion Into The Pockets Of US Consumers

maths congruence

Photo: Krypto on flickr

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. SEE MORE — The 9 Events That Trigger Natgas Price Shocks

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.