Ben Dell is managing partner at private equity firm Kimmeridge.

The Department of Energy’s (DOE) latest study predicts domestic natural gas prices will materially rise if the U.S. increases the export of LNG.

Yet, predicting such pricing has invariably been a fool’s errand. It is a commodity market that always surprises. With over 60% of demand driven by weather, and upstream drilling technology consistently changing the economics of supply, the only thing we can confidently say is that almost all long-term forecasts are going to be wrong and should be balanced with broader factors at play when making policy decisions on energy.

For those who need more evidence, look no further than our own government agencies (Energy Information Administration and DOE), who in 2007 incorrectly forecast the U.S. would be in need of imported LNG. Of course, we didn’t—less than two years later there were multiple LNG export projects pending regulatory review before the DOE and Federal Energy Regulatory Commission. In 2012, these same agencies forecast that when exports reached 12 Bcf/d, gas prices would rise to $6.37 per thousand cubic feet (Mcf).

Reflect on this for a moment: the most informed federal agency studying U.S. energy previously forecast a need to import natural gas (prior to the shale revolution), and then when the nation became an exporter of LNG in 2016, it forecast that the exports we have today would double gas prices. The reality is, gas prices did not in fact double. They didn’t even come close. 

It is against this backdrop that we should take the DOE’s latest “study” with a pinch of salt. Irrespective of this analysis having become a political football, as evidenced by Secretary of Energy Jennifer Granholm’s grossly sensationalized summation of the report, it is clear that the likelihood of the forecasts being right is also very low. The authors themselves make this clear, stating that “[g]iven the global scope and timeframe examined in this study, there should be recognition of the inherent uncertainty in conclusions.”

That might be the only thing we’re certain they got right. Take a step back and look at historical data. Since 2000, natural gas prices have averaged $4.34/Mcf, with a low of $1.49/Mcf and a high of $13.42/Mcf. Today’s spot price of $3.41/Mcf and the forward price in 2027 of $4/Mcf are not unusual. Amongst a basket of goods, natural gas is one of the few commodities that has not inflated. Since 2016—the start of U.S. LNG exports—prices have remained broadly flat. In short, prices have seen little to no inflation because supply (up 50 Bcf/d, or 100%, since 2000) has easily met demand, with new technology consistently unlocking lower cost shale resources.

So, what to make of Granholm’s forecasts that “unfettered exports of LNG would increase wholesale domestic natural gas prices by over 30%”?  That sounds material, but from today, a 2% inflation in price—which is the Fed’s target—would be 64% higher in 2050. So even the DOE’s own worst case is deflationary relative to target wage growth. Moreover, the forward strip in 2028 is already at this level, and while this 30% rise would in fact be equivalent to $4.42/Mcf in 2050, this is merely $0.07/Mcf above the 24-year average (2000-present) of $4.35/Mcf.

As for the fear of another 40 Bcf/d of LNG exports (the “unfettered” case) by 2050, based on historical performance, this too could be met by domestic growth, but realistically is never going to be required. This all seems to suggest that even if the DOE were correct, then any increase in price would be moderate, below core inflation and net positive for the consumer, even before taking into account the impact on economic growth.

But what about emissions or the impacted communities that the report frets over? Overwhelmingly, Louisiana and Texas Gulf communities support LNG. The developments bring good, high paying jobs, while LNG project sponsors are financing massive community investments such as the rebuilding of a local hospital. In this regard, DOE’s study does not explicitly find U.S. LNG exports inconsistent with the public interest, which is the legal standard under the Natural Gas Act. Looking at emissions, the industry is actively reducing its footprint and will do more in the next 25 years. The growth in natural gas has displaced coal domestically and, counter to the DOE’s assumptions, there is no statistical data to suggest LNG replaces renewables in emerging markets. In addition, operators are preparing to deliver net zero cargoes verified from wellhead to water, further underscoring the potential of U.S. gas to drive CO2 reductions in the global market.

Opportunities to have such a materially positive impact on U.S. economic growth, jobs, investment and global emissions, as well as on some of the lowest income communities of the U.S., should not be passed up.  While the U.S. procrastinates on its future LNG strategy, globally, the share of non-U.S. LNG contracts signed in 2024 with producers from the Middle East and elsewhere has outpaced contracts signed with U.S. producers.

An honest assessment of the DOE’s analysis would suggest it should be treated for what the authors state it is: “an exercise exploring alternative conditional scenarios of future U.S. LNG exports.”

However, as far as setting U.S. energy policy, we should expand U.S. LNG exports based on the many tangible, verifiable outcomes that definitely are in the public’s best interest.

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