In a recent analysis, the Center for Strategic and International Studies found that energy prices can remain low for domestic consumers, even as LNG exports rise, if the U.S. maintains its robust domestic supply of natural gas.

The research comes amid the Biden Administration’s pause on new LNG export permits as it analyzes potential costs increases related to the high number of exports.  According to The White House, the Department of Energy analysis used to “underpin LNG export authorizations is five years old” and “no longer adequately accounts for considerations like energy costs increase for American consumers and manufacturers.”

The 2018 Department of Energy study referenced concluded that, “the key determinant of upward price impact is the trajectory of domestic natural gas production.” The good news is, domestic dry natural gas production has increased 23% from 2018 to 2023.

In 2023, the U.S. became the top exporter of LNG, setting new export records in November and December. That same year, the Henry Hub price average was $2.57 per MMBtu, well below the 2010-2015 average of $3.64 per MMBtu when the U.S. was exporting 99% less, per 2015 export figures.

In its analysis, CSIS notes that circumstances since 2018 have in fact changed, but the U.S. can still maintain its high exports and low domestic prices if the domestic gas supply remains strong. Texas has been a key player in keeping supplies steady, with the Lone Star State setting new record production numbers in 2023, reaching 20 bcf/d, largely thanks to the Permian Basin, the top producing natural gas basin in the country.

Since 2018, LNG exports have increased considerably, and trends continue to shift upward as the need for an abundant and reliable fuel source remains critical. Importantly, the U.S. has played a key geopolitical role through its LNG exports, supplying key allies in Europe and Asia as they face supply shortages.

The strong supply of U.S. natural gas has also kept domestic energy markets stabilized. Currently, the U.S. electric power sector is the main destination for domestic natural gas supplies, but with additional LNG projects in their final DOE authorization or final investment decision phase, exports could grow to 12 trillion cubic feet annually, surpassing the power sector as the destination for U.S. natural gas supply. Maintaining a strong demand for LNG means maintaining strong domestic natural gas production to ensure domestic natural gas prices remain low at home. A bar the oil and gas industry stands ready to meet.

The CSIS analysis demonstrates that by creating a scenario where the demand for natural gas dwindles because of policies like an LNG export pause or the EPA’s proposed Power Plant Rule, we jeopardize our affordable domestic energy supply because of decreased production. Our allies, who look to us as a reliable trade partner, would be in an even worse scenario, paying an increased price for the remaining limited supply of natural gas. Energy shortage crises, like those Europe experienced in mid-2021 through late 2022, would be commonplace.

American and Texan natural gas producers are proving an ability to not only meet local and global demand, but an ability to do so responsibly. According TNG’s latest report, Permian Basin methane intensity fell by early 85 percent between 2011 and 2022, even as new production records were reached in that same time frame.

Creating policies and regulations that make production more challenging will inevitably raise prices, while ensuring our key trade partners and allies fall into challenging circumstances securing affordable energy supplies. As CSIS concluded, domestic price impacts alone are not sufficient reason to limit LNG exports, but we know that is not the only motivation.