Sen. Warren questions LNG exports as US home heating costs soar

Yesterday Sen. Elizabeth Warren sent a letter to oil and gas CEOs demanding more information on higher prices of “natural” gas, and the role of increased exports in particular.

Almost half the country uses gas to heat their homes, and could be seeing a 30%-50% jump in their monthly bills this winter, according to the U.S. Energy Information Agency. Mounting evidence shows that record levels of liquified gas exports are a primary driver of the higher costs, in addition to their significant impact to the health of Gulf Coast communities.

Warren joins Sen. Joe Manchin, Sen. Angus King and a trade group representing US manufacturers in calling for increased scrutiny on the role of exports in higher prices and for the Department of Energy to consider curtailing exports to stabilize domestic prices.

Sierra Club experts are available to speak more about the true causes of spiking gas prices.

What’s causing this price spike?

• The fossil fuel industry is selling off US gas to the highest bidder

• Liquified gas exports have rapidly expanded in recent years - up 42% compared to last year - siphoning off gas that would otherwise be lowering prices domestically. Fully 20% of US gas is now exported - something that wasn’t true even a few years ago.

• The rapid growth of exports makes US domestic gas prices more dependent on international markets, where gas is 4-5 times more expensive. This increases the chances of price spikes, volatility and geopolitical interference. 

• The escalating price of gas is alarming US industrial manufacturers, who recently asked the Biden Administration to limit exports to keep prices stable. 

• Despite the economic pain this is causing Americans, recent price spikes may actually incentivize more gas exports as industry executives try to take advantage of high prices overseas. The industry is pushing to build more than 20 additional gas export facilities, mostly in Gulf Coast communities already suffering from elevated levels of fossil fuel pollution and the impacts of the climate crisis.

• Extreme weather events driven by the climate crisis

• This summer saw historic overlapping weather disasters that disrupted fossil fuel production, including Hurricane Ida, which took Gulf Coast drilling wells offline for weeks. 

• Meanwhile drought and heatwaves in the American West increased demand for gas in the electricity sector as output from hydroelectric dams sharply declined.

• The bust of the US shale industry

• After years of excessive drilling fueled by Wall Street speculation and the spread of hydraulic fracking, hundreds of oil and gas drillers went bankrupt amid high levels of debt and increasing competition from low-cost wind, solar and battery storage. 

• Concerned about taking on more debt, oil and gas companies aren’t opening as many new wells, but are now finally focusing on profits for shareholders after years of financial losses. 

What does this mean for our energy future?

• Gas is risky. The more we depend on it, the more vulnerable we’ll be.

• This isn’t the first time that gas has spiked in price, and it won’t be the last. 

• Gas is a volatile commodity. Supply is highly dependent on how many new wells are being drilled, or speculative and unprofitable drilling operations shutting down. 

• Gas has many competing end uses - it’s used by heavy industry, in the electricity sector, in export facilities and to heat millions of Americans’ homes. These competing demands are served by pipeline operators with a financial incentive to get the top price for their product. 

• Extreme weather events, like heat waves in the summer and sudden cold snaps like Winter Storm Uri in February 2021, have repeatedly led to massive price spikes that almost always fall to consumers. Communities from Minnesota to Texas will be paying higher prices for gas for years to come just to pay off billions in additional storm-related gas costs. Hurricanes and winter storms often take gas production offline at the same time that demand spikes as people need to burn more gas to heat or cool their homes. 

• The era of “cheap” gas is likely over. The fracking industry has never been financially viable, and has always been driven by oversupply and massive amounts of debt. Higher prices are likely the norm, even without oil and gas producers having to pay for their pollution.

• Despite this risk, policymakers are letting the gas industry make us more dependent on their product with each passing day. Utilities are planning to build up to 250 gas power plants and 20 new or expanded liquefied gas export terminals in the coming years, and the gas industry hooks up a new building to run on gas once a minute across the country.

• Wind, solar and energy storage is more affordable than gas in the power sector, and the sun and wind have zero fuel costs forever, which means fewer unexpected price spikes for consumers. 

Who is at risk?

• Predictable energy bills are especially important for low-income households. Even before these price spikes, 1 in 3 US households reported having trouble paying an energy bill. These energy burdens fall disproportionately on communities of color due to housing discrimination and other forms of systemic racism. Having an unaffordable energy bill puts these families at greater risk of having frequent gas utility shutoffs.

• Almost half of households in the U.S. heat their homes with gas, and the EIA predicts that their bills will be 30% higher this year (and 54% higher for households using propane and 43% more for heating oil).

What can we do?

• Stop new gas export facilities, which raise domestic gas prices, pollute frontline communities and delay the world’s transition to clean energy.

• Move more quickly to clean energy, which provides predictable prices for electricity and home heating.

• The Build Back Better Act, which passed the House of Representatives last week, contains vital funding to provide rebates to help people access modern appliances that run on clean electricity, like heat pumps and electric hot water heaters. All-electric homes mean lower monthly bills and more insulation from gas price spikes. Congress is also considering an additional investment in the Weatherization Assistance Program, which helps fund vital energy efficiency improvements that reduce energy costs for low-income households. 

• While we transition towards a future of energy efficient homes that run on clean electricity, we need more funding right now to help people struggling with higher gas costs as we head into the winter months. Congress needs to immediately increase funding for the Low Income Home Energy Assistance Program (LIHEAP), which helps low-income homeowners and renters pay their energy bills.