LNG Export Pause May Spike Gas Costs by $18B
- Biden Administration’s pause on new LNG export permits sparks controversy across the U.S.
- 9%-14% Rise in Gas Prices: Economic Alert
- Predictions suggest U.S. natural gas prices could rise by 9%-14% annually in the medium term if paused projects proceed.
The recent decision to pause new permits for LNG export projects has stirred debate across the U.S. Environmentalists have applauded the move, viewing it as a significant victory for climate action. Meanwhile, the U.S. industrial gas consumer group has expressed support. It argued that the halt could ensure more stable domestic gas prices, benefiting businesses.
Oil and gas industry associations have vehemently opposed the move. They labelled it a “loss for America” and a strategic advantage for geopolitical competitors like Russia. They argue that this decision could weaken the U.S. economy, cost jobs, and tarnish America’s reputation as a steadfast gas supplier to its allies.
$11-$18B Annual Cost from LNG Export Halt
The implications of proceeding with the currently paused LNG export terminals are significant. According to Energy Innovation and Jesse Jenkins of Princeton University, approving these projects could increase U.S. natural gas prices by 9% to 14% per year. Consequently, this spike could translate into an additional $11 to $18 billion in annual gas costs for U.S. households and industries. These figures are daunting. However, they also suggest that price impacts could stabilize over time as production adjusts to meet demand.
The Industrial Energy Consumers of America highlights the broader economic impact of rising natural gas prices. It noted that every $1 per MMBtu increase can add $34.2 billion in annual costs to domestic consumers, including higher electricity prices.
EIA: Gas Prices to Stay Under $3.00/MMBtu by 2025
The Energy Information Administration (EIA) forecasts that the Henry Hub price, a benchmark for U.S. natural gas, will average under $3.00/MMBtu in 2024 and 2025. Consequently, this reflects a modest increase from the 2023 average of $2.54/MMBtu. Furthermore, this projection is based on strong natural gas production and increased storage levels. Therefore, these forecasts suggest a delicate balance between maintaining affordable energy prices and supporting the global transition towards cleaner energy sources.
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