Biden can help reduce home energy prices and emissions by better managing LNG exports

The U.S. is now the world’s largest exporter of liquified natural gas (LNG), even though prior to 2016, the country had not exported any natural gas in this form. This dynamic is the culmination of a years-long lobbying push by the U.S. fracking industry. But this good news for the fracking industry has resulted in bad news for American families that have faced the steepest electric and natural gas prices in more than a decade.

Although natural gas prices have declined over the last month, continued price instability looks to be in store for years ahead. In fact, the Energy Information Administration stated in its most recent Short-Term Energy Outlook that natural gas prices are expected to remain roughly where they’re at because of domestic demand and rising exports. LNG exports have more than doubled since 2017, and they increased by 26 percent in 2021 alone. The reasons include China reopening its economy and Europe likely needing massive imports of natural gas next winter if the war in the Ukraine continues.

This means that the U.S. now must compete with other countries, including Europe and China, for American-produced natural gas. Yet, many low-income families and others in the U.S. are already struggling to pay their electric and natural gas bills because prices have been increasing. Compared to last winter, the cost of home energy with natural gas is expected to increase by 28.6 percent over 2020-21 costs. 

The Biden administration must take action to do more to protect low-income families as well as farmers and small business from the significant economic hardship they face caused by these higher natural gas prices that are a direct result of rising exports.

As required by the Natural Gas Act of 1938, the U.S. Department of Energy decides on the level of natural gas that can be exported to other countries. However, before the agency approves any new export licenses, DOE is required to determine that natural gas exports are “consistent with the public interest.”

Sen. Ed Markey (D-Mass.) recently told us that “We cannot allow LNG exports to raise domestic energy prices for American families who are already struggling to heat their homes and pay their sky-high electricity bills. We need the Department of Energy to do everything in its power to rein in any natural gas industry profiteering at the expense of American consumers.”

To this end, the nation’s leading energy policy groups recently sent a letter to DOE Secretary Jennifer Granholm noting that LNG exports in fact are inconsistent with the public interest. The groups argued that these exports contribute to oppressive energy bills and rising levels of energy poverty for millions of Americans. The groups requested that DOE initiate a rulemaking to ensure that the needs of our European allies are balanced with protecting American families. 

The letter highlighted a 2018 DOE study that claimed that as long as American LNG exports increase, the benefits to households with shares in companies that own liquefaction plants “outweigh the income loss associated with higher energy prices.” Yet, the letter notes, DOE currently performs no distributional analysis to measure the impact of LNG exports on families of different incomes or to assess the energy burdens of communities of color.

Similarly, 10 U.S. Senators sent a letter last February to Secretary Granholm asking DOE to review LNG exports and their impact on domestic prices, and to then develop a plan to ensure that natural gas remains affordable.

But that does not mean we should increase supplies in the U.S. by increasing drilling or that we should cut off exports to our European allies who are facing continued higher natural gas prices because Russia decided to weaponize its exports.

Rather, instead of increasing drilling, the U.S. should boost investments in energy efficiency measures and the electrification of buildings, as well as in wind and solar technologies. All of these measures are needed to help American consumers wean away from their dependence on fossil fuels such as natural gas. But because this can’t happen overnight, in the short term we need to protect families from high prices.

The Biden administration needs to do the right thing for consumers as natural gas exports continue to increase, and as new licenses for exporting U.S. natural gas are considered. The administration must address the impact LNG exports have on raising natural gas bills for millions of Americans, and particularly on the burden that this increase in the cost of energy puts on low-income families.

Mark Wolfe is an energy economist and a public policy expert on climate change and the impact of rising temperatures on low-income families. He is executive director of the National Energy Assistance Directors Association and the Energy Programs Consortium. Follow him on Twitter @mlwolfe15

Tyson Slocum directs Public Citizen’s Energy Program, covering the regulation of petroleum, natural gas, and power markets. He serves on the U.S. Commodity Futures Trading Commission’s Energy and Environmental Markets Advisory Committee and on its Market Risk Advisory Committee. Follow him on Twitter @tysonslocum