Debunking Three Myths Behind President Biden’s Freeze on America’s Natural Gas

Rob Jennings
Posted February 22, 2024

After President Biden paused permitting to supply U.S. liquefied natural gas (LNG) to allies, America needs a fact-based analysis on the reality of his decision to block new U.S. LNG projects indefinitely:

• A lost opportunity to generate economic might at home;
• A weakening the security of America and its allies; and
• A jump in global greenhouse gas emissions.

The whiff of election-year politics emanates from the decision. Bipartisan opposition has quickly formed.

U.S. Sen. Michael Bennet (D-CO) is the latest Biden ally to mourn the weakening of America’s “massive strategic strengths – our clean energy and our fossil fuels.” U.S. Sen. Lisa Murkowski (R-AK) called the move a case of President Biden trying to “get well” with environmental activists. Democrats, Republicans and Independents know that U.S. energy and foreign policy should be off-limits for political games.

It is unfortunate that the LNG policy debate is happening amid misleading opinion columns like one recently in Forbes that tried to justify the Biden administration’s LNG freeze with several faulty assertions.

The Truth: LNG and Domestic Natural Gas Prices

Let’s start with the belief that LNG could raise domestic natural gas prices – one of the cards played at a recent Senate hearing by a top Energy Department official, David Turk.

U.S. natural gas prices are among the lowest in the world. This has been true even as U.S. LNG shipments to allies ramped up in the mid-2010s. The Energy Department’s own data crunchers reported that U.S. natural gas prices were down 62% last year compared to the annual average in 2022 – even as U.S. LNG deliveries reached all-time highs while supporting our allies. And compared with 2016, when the U.S. LNG exports began, domestic gas utilities are currently paying less for natural gas (adjusted for inflation). Thus, changes in consumer bills are likely due to other factors, not the cost of the gas itself.

If the administration fears high natural gas prices, it should pursue smart energy policy like support for new pipelines to address infrastructure constraints that a 2023 study found are an impediment to bringing the lowest-cost natural gas to market. Ask New Englanders about supply gaps or high energy costs in winter.

Related to the pricing argument is the false notion that LNG producers merely seek to sell to the highest bidder, snubbing U.S. consumers. The reality is that U.S. LNG producers sell LNG to off-takers under long-term contracts that are not linked to global prices. These contracts are finalized before the LNG projects get built.

More broadly, LNG provides significant jobs and economic benefits in the U.S. A recent study quantified those benefits, estimating that meeting President Biden’s LNG pledge to Europe would support an average of 71,500 jobs from 2025 to 2030, spur $63.1 billion in capital expenditures for facilities and pipeline projects throughout the supply chain, and contribute $46 billion to the U.S. economy over the same five-year period.

The Truth: Geopolitical Impacts of American LNG

A second claim made by the Forbes piece is that LNG facilities frozen by the Biden administration pause are not built yet and thus cannot help U.S. allies now. We’ve heard this before, about American oil production, that holding new lease offshore and onshore oil lease sales would not help lower gasoline prices. Such claims are wildly short-sighted and ignore the immense future need for energy. America is producing crude oil at record levels today because of policies and investments made years ago. Not planning for future natural gas demand today is a one-way ticket to an energy crisis down the road.

We know that demand for LNG is increasing. Shell’s brand-new annual, long-term LNG outlook projects that world demand will increase 50% by 2050, led by the needs of India and developing nations in Southeast Asia. Federal data says India’s industrial needs will triple its LNG consumption by 2050.

And then there’s Europe. America’s LNG producers helped Europe avoid the worst of an energy crisis in 2022 by increasing shipments more than 140% over the previous year. It’s silly to argue Europe’s crisis is over, and that more U.S. LNG isn’t needed. Another study found that Europe could face a looming natural gas supply gap as it moves away from Russian natural gas. Taking the short view on LNG could put the energy security of America’s allies at risk – and our own security as well.

The Truth: LNG’s Climate Benefits

Finally, let’s talk about climate. The administration claims an LNG review is necessary to examine the climate impacts of LNG. A better idea: Save Uncle Sam’s time and money.

U.S. carbon dioxide (CO₂) emissions from the power sector are near generational lows thanks to increased use of natural gas to fuel electricity generation. Plus, out of all the CO₂ emissions reductions in the U.S. power sector since 2005, the switch to natural gas accounted for more than 60% of them.

Seen another way, the Biden administration’s decision to constrict U.S. LNG basically encourages other nations to use more coal – counter to global climate goals. The fact that the International Energy Agency said the world would record its highest coal use ever in 2023 ought to kill the LNG freeze altogether.

The administration’s LNG decision is misguided on its face, and the justifications given for the pause don’t hold up under scrutiny. U.S. jobs, economic growth, emissions reductions and the security of America’s allies all are at risk from this politically driven, unforced error.