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assessed. Fracking will have positive impacts on local economies as energy prices fall and the amount of disposable incomes that people have, rises. As disposable income rises the incentive to save decreases and the incentive to spend increases. People will spend more money in local shops and businesses. The taxes received by the local governments will rise and the government deficit will fall. However this may not be the case on an international scale. Fracking may have a completely different effect on a country’s economy than it has on a city’s or town’s economy. For example in the UK the government MEPOs must be assessed. On one hand unemployment may rise in the fracking industry but jobs will be lost in the transportation sector as there is less of a demand for coal and other resources to be transported. Another key MEPOS that may be affects is a sustainable rate of inflation. If disposable income rises rapidly, demand pull inflation will increase at an alarming rate. Inflation may rise above 2%, which is the government’s target. Trade between countries may also fall as energy sources may no longer be imported. For example in the UK energy travels from Norway and France to ensure energy targets are met. However if fracking is allowed in the UK there will be less of a need to import coal and other energy sources. Countries such as Norway rely on these trades and their economies may be negatively impacted by the introduction of fracking in the UK. If fracking is allowed consumers should benefit first. Fracking can drive down energy prices and benefit the economy. If energy prices fall, there is renewed spending in other sectors of the economy. This also benefits individuals and small business owners. The benefits felt by individuals is then fed onto the government in tax receipts. If spending in shops increases and company revenues rise, tax receipts will rise. This will reduce the government deficit as the gap between income and government spending narrows. The benefits felt by the government are derived from the benefits felt by individuals of falling energy prices, due to fracking being allowed. China alone has 1,275 trillion cubic feet of shale gas reserves. This shale gas could provide energy for a single country for over one hundred years. If fracking is allowed and the benefits from fracking can be extracted, global economies will flourish and the risk of a future energy crisis in the coming centuries will fall. Not only will fracking benefit individuals of today, but it will also benefit future generations and provide energy for hundreds of years. Fracking drives energy prices down. Figures show that in the USA fracking created a ten year energy price low in 2010-2011. If energy prices fall, spending into the economy rises, causing an economic boom, benefitting both consumers and suppliers, as well as the government and small businesses. 43 This graph shows how since the introduction of fracking shale gas in 2007, the price of natural gases have fallen, reducing energy prices around the US. If fracking were allowed in the UK, a similar energy price fall would occur. The primary benefactors of fracking are energy consumers. Energy consumers see falls in the price of energy, rising disposable income, encouraging spending in other sectors of the economy. The benefits felt by energy consumers will trickle down to other key players in the economy and energy sector. Spending will increase in shops and businesses and investment will rise. A rise in shops’ revenues will benefit the economy for a number of reasons. If revenue rises corporation tax receipts will rise. A rise in revenues will also benefit the unemployed. If revenues of firms and small businesses rise, employment will rise as shops can afford to hire more staff. As the shops and businesses grow, they will benefit from economies of scale that allow them to hire more workers
43 http://www.brookings.edu/blogs/brookings-now/posts/2015/03/economic-benefits-of-fracking
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