For more than a decade, Americans could rely on cheap natural-gas prices to heat their homes and power businesses.
That trend was jolted in 2022 after Russia invaded Ukraine and the US raced to send natural gas to Europe to fill a gap left by Russian energy supplies. Prices shot up exponentially, and homeowners, renters, and businesses are still seeing the ripple effects on their utility bills — even though natural-gas prices have since fallen.
The events reflect a remarkable transformation of the US natural-gas industry, which less than a decade ago was in no position to sell to other countries. The fracking boom in the Permian Basin of Texas and New Mexico initially meant that the US could meet its own energy demand. But by 2016, the country was making enough of the fossil fuel to start exporting it overseas. Just six years later, the US surpassed Qatar to become the world’s leading exporter of natural gas.
Those rising gas exports, in the form of liquified natural gas, or LNG, are facing a reevaluation based on climate threats and worries Americans will face higher prices at home. President Joe Biden last week temporarily halted approval of new export terminals so the administration could assess their impact on the economy and the environment, particularly for communities that would live near those polluting terminals.
The decision sparked debate over whether the US’s newfound dominance as a gas exporter was good for Americans’ wallets. For consumer advocates, the answer is no. Exporting more gas makes prices more sensitive to a volatile global market, they say. A cold snap in Europe or unrest in the Middle East can spike demand for natural gas — and therefore prices — and the climate crisis is only increasing the risks of disruptions due to extreme weather.
“All it takes is one outage, one regional storm, to have a much more disruptive price increase that otherwise wouldn’t be present,” Tyson Slocum, the director of Public Citizen’s energy and climate program, told Business Insider.
The head of global natural gas research at Goldman Sachs put it this way in an interview with Marketplace last summer: “The US exports LNG and exports energy security to the rest of the world, but imports volatility.”
Slocum added that natural-gas exports put upward pressure on prices, citing recent reports by the US Energy Information Administration and the Federal Energy Regulatory Commission.
Now the US is set to nearly double its natural gas export capacity by 2028, when at least five more terminals could be online. The expansion isn’t impacted by the White House’s pause, which only applies to terminals that haven’t received federal approval yet.
But ask people in the oil and gas industry, and they’ll say the expansion is great for consumers.
Mike Sommers, the CEO of the American Petroleum Institute, told CNBC on Monday that “when we have more markets, that means there’s lower prices for American consumers.”
An API spokesperson said that several factors affect the price US customers pay for gas. The fact that residential gas prices between 2015 and 2019 barely moved, even as America shipped more overseas, shows the industry can meet global demand for gas while keeping the US well-supplied. The higher costs between 2021 and late 2023 are due to the energy crisis in Europe and “cannot explicitly be linked” with greater US gas exports, the spokesperson said.
API also cited the Energy Department’s most recent research in 2018. The study suggested that higher exports would raise natural-gas prices for US households but those would be offset by higher stock prices and other economic benefits.
Consumer advocates blasted the study as outdated and based on flawed methodology.
“It’s hot garbage,” Slocum said. “Stock ownership is concentrated among the wealthiest 1% of Americans. They don’t care if their utility bill goes up. But low-income people or senior citizens on a fixed income? You better believe that they are experiencing that.”