Published
August 05, 2024
The future of liquified natural gas (LNG) exports has become an unnecessarily contentious energy debate. Widely heralded in 2022 for saving European allies from disaster after Russia’s invasion of Ukraine, U.S. LNG now finds itself under relentless attack from activists, who in January convinced the White House to halt issuance of export licenses. We’ve commented at length on the economic and environmental foolishness of this decision (here, here, here, here, and here, for example).
Six months later the campaign continues apace, with the latest anti-LNG bogeyman found in a letter from New England senators blaming natural gas exports for harming consumers in their states. While it is true that New England consumers pay more for natural gas—about 25% higher than the national average (they also pay the highest electricity rates)—their LNG blame game badly misses the mark.
Here's why: As shown in the chart below, natural gas prices for New England consumers have actually been trending lower. In the ten years prior to the rise of LNG exports, New England consumers paid an average of nearly $11 per million btu (mmbtu) for natural gas. Since the first LNG cargoes left the Gulf Coast in 2016, they’ve paid an average of $6.48—about 40% less on an inflation-adjusted basis.
This isn’t to say that New England doesn’t have a problem. Unfortunately, a years-long blockade of new pipeline infrastructure has left the region unable to access plentiful supplies of affordable energy less than 200 miles away in Pennsylvania’s Marcellus region. As the same Department of Energy responsible for the LNG export ban has explained it, this lack of infrastructure leaves New England dependent on LNG imports, including inefficient and expensive imports via truck!
Contrast this situation with national trends, where consumers are now benefiting from historically low prices during a period of record-high power sector demand and record-high exports. As we detailed last month, America’s enormous reserves of shale gas allow supply to meet growing demand—and then some—with domestic markets consuming much higher volumes than when exports began in 2016.
The bottom line: The root cause of New England’s high energy costs is well understood. It has nothing to do with LNG exports and everything to do with a lack of infrastructure necessary to access nearby natural gas supplies. The path to lower prices for Northeast consumers will begin when the pipeline blockade ends.
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About the authors
Dan Byers
Dan Byers is vice president for policy at the U.S. Chamber of Commerce’s Global Energy Institute with a focus on environmental and regulatory issues, Byers develops and implements strategies in support of the Institutes broader education and advocacy efforts.
