US Natural Gas Prices Surge, Fueling Affordability Crisis and Political Headwinds for Trump
As the United States exports record volumes of liquefied natural gas (LNG) to international markets, domestic consumers are facing a deepening affordability crisis, with wholesale prices jumping over 70% in the last year. The US benchmark Henry Hub price settled at $5.29 on Friday, reaching its highest level since December 21, 2022 – a period marked by energy market turmoil following Russia’s invasion of Ukraine.
The escalating cost of natural gas is exacerbating concerns about rising living expenses across the US, directly challenging claims made by President Trump that he would drive down energy prices during his time in office. The price surge coincides with a period of frigid temperatures nationwide, increasing demand for power generation to heat homes and businesses.
Trump’s administration has prioritized boosting LNG exports and domestic gas production, framing it as a strategy to achieve “US energy dominance” and support the burgeoning artificial intelligence (AI) industry. However, this approach is now facing significant backlash from consumers and industry leaders who fear rising power prices will worsen the “cost of living crisis” and undermine American competitiveness.
“As North America exports more natural gas, it imports higher and more volatile gas prices as a result,” explained an analyst at the Institute for Energy Economics and Financial Analysis, a think-tank supported by environmental foundations. “This is beneficial for the gas industry, which is experiencing increased revenues, but it’s detrimental to US consumers who rely on gas for heating and power.”
Analysts suggest the price increases reflect a fundamental shift in gas pricing dynamics, driven by the increasing diversion of production towards booming LNG exports and the anticipated surge in demand from energy-intensive AI data centers. “During the coldest days of winter, LNG exports and local consumers are competing for the same supply,” noted an energy consultant at Wood Mackenzie. “In extreme weather, there may not be enough gas to meet both demands.”
Industrial Energy Consumers of America, representing large manufacturers, is urging US policymakers to prioritize domestic energy needs over LNG exports. “As export volumes grow, price and reliability risks increase for US consumers, directly impacting manufacturing competitiveness,” stated the group’s chief executive. “We are entirely dependent on the supply at the end of the pipeline.”
Recent polling data indicates growing public skepticism regarding the President’s energy policies. A Yahoo/YouGov poll revealed that two-thirds of respondents believe Trump has done more to raise prices (49%) than to lower them (24%). Despite these concerns, the President this week dismissed cost-of-living anxieties as a “con job by the Democrats.”
During his election campaign, Trump pledged to halve energy prices within his first year in office – a promise that resonated with voters burdened by high inflation and energy costs during the previous administration. However, since assuming office, the cost of electricity and gas has continued to climb. Data from the US Bureau of Labor Statistics shows rates increased by 5.1% and 11.7% respectively in September compared to the previous year.
The Energy Information Administration (EIA), the US government’s statistical agency, projects that the average price of natural gas paid by electric power plants will increase by 37% this year, while industrial customers will see a 21% rise. Residential and commercial consumers are expected to pay 4% more on average compared to last year.
In September, the US exported a record 9.41 million metric tonnes of LNG – a nearly 20% increase year-over-year, according to the EIA. US LNG shipments have been crucial in supplying Europe during the energy crisis triggered by Russia’s invasion of Ukraine, with key destinations including Spain, France, the UK, and the Netherlands.
The LNG industry and gas producers maintain that surging exports are not the primary driver of rising retail prices, arguing that ample gas reserves exist within the US. Instead, they attribute the problem to a lack of political will to approve new pipelines and gas storage facilities. “It’s not AI, it’s not LNG exports. It’s a simple matter of political forces obstructing market forces, manifesting as blockages in pipeline and energy infrastructure,” asserted the chief executive of EQT, the largest gas producer in the US.
According to EQT, infrastructure limitations are creating regional market disconnects. The company anticipates selling gas for approximately $4 per million British thermal units this winter in Appalachia, while Boston and parts of New England could pay as much as $14 per mmbtu due to limited pipeline capacity. “This isn’t just the most expensive natural gas in the country; it’s the most expensive natural gas in the world,” the CEO stated.
However, analysts predict that the combination of booming LNG supply, growing demand from data centers, and increasing extraction costs in certain US basins, such as the Haynesville, will continue to put upward pressure on natural gas prices. “Between now and 2030, LNG export capacity on the US Gulf Coast will double, and that will undoubtedly impact prices,” said an analyst at Rystad.
