{"id":61172,"date":"2023-12-01T10:13:54","date_gmt":"2023-12-01T18:13:54","guid":{"rendered":"https:\/\/energi.media\/?p=61172"},"modified":"2023-12-01T10:19:10","modified_gmt":"2023-12-01T18:19:10","slug":"lng-exports-to-foreign-markets-leading-to-imports-of-high-prices-for-u-s-residential-customers","status":"publish","type":"post","link":"https:\/\/energi.media\/news\/lng-exports-to-foreign-markets-leading-to-imports-of-high-prices-for-u-s-residential-customers\/","title":{"rendered":"LNG exports to foreign markets leading to imports of high prices for U.S. residential customers"},"content":{"rendered":"

This article was published by IEEFA<\/a> on Nov. 29, 2023.<\/em><\/p>\n

November 29, 2023 (IEEFA) –\u00a0As winter heating bills start hitting America\u2019s mailboxes over the next few weeks, many families will face sticker shock. Even as inflation has eased in much of the economy, it could cost more than ever to heat our homes. Bloomberg reports<\/a> that natural gas bills have gone up 29% since the beginning of 2020.<\/p>\n

Many Americans were braced for higher gas bills in 2022, a rare year in which natural gas prices regularly made news headlines. Russia\u2019s invasion of Ukraine, followed by the explosion of the Nord Stream pipeline carrying gas from Russia to Germany, had caused global gas prices to spike to all-time highs. U.S. exporters quickly ramped up shipments of liquefied natural gas (LNG) to take advantage of high international prices. Surging LNG exports, in turn, left U.S. gas markets short of gas. As America exported more and more LNG, the nation imported higher gas prices as a result.<\/p>\n

Gradually, however, U.S. gas markets came back into balance. Spurred on by high prices, North American gas producers boosted output, even as consumers trimmed demand. By early 2023, wholesale U.S. gas prices had fallen back to roughly where they\u2019d been before Russia upended global energy markets.<\/p>\n

Yet despite the drop in wholesale costs, many residential utilities are still, to this day, charging their customers near-record fees for gas. As of August, the most recent month for which comprehensive national data<\/a> was available, residential gas prices had just started to ease, but remained well above their average for the previous decade. (See Figure 1.) In 10 states, August 2023 residential gas prices were at their highest level of all time. Notably, those states included West Virginia and Ohio, which are at the epicentre of Appalachia\u2019s gas production boom\u2014providing concrete evidence that producing lots of gas locally doesn\u2019t always keep your utility bills down.<\/p>\n

Figure 1. U.S. residential gas prices, rolling 12-month moving average.<\/p>\n

($\/thousand cubic feet)<\/p>\n

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Source: IEEFA from U.S. Energy Information Administration data.<\/em><\/figcaption><\/figure>\n

 <\/p>\n

If wholesale gas prices are about the same now as they were a few years ago, why are so many families still paying for last year\u2019s export binge? The answer is simple. Utility regulators typically let gas utilities pass on the full wholesale cost of gas to their customers, but this process can take months or even years. In many states, utilities didn\u2019t get permission to raise rates until long after wholesale prices had shot up, which means many utility customers are still paying high prices for gas that their utilities bought a year or more ago. This isn\u2019t just a problem for gas. Many electric utilities work in the same way, passing on fuel costs to their consumers.<\/p>\n

Across the country, utilities and regulators have been quite explicit about the role that gas exports played in boosting costs for their customers.<\/p>\n