Fossil Gas is a Rosetta Stone for Trump Energy Policy – This is Not Cool (thinc.blog)
 US Energy Information Administration expects gas prices to increase primarily due to massive increases in US exports of Liquified Natural Gas.
Exports were banned by law until a decade ago, but now US consumers must compete for a limited resource with countries in Europe and Asia willing to pay multiples of what Americans pay.
Energy Information Agency (EIA):
“We expect increases in the Henry Hub natural gas price in 2025 and 2026 as demand for natural gas grows faster than supply, driven mainly by more demand from U.S. liquefied natural gas (LNG) export facilities, reducing the natural gas in storage compared with the last two years. In our January Short-Term Energy Outlook (STEO), we forecast the U.S. benchmark Henry Hub natural gas spot price to increase in 2025 to average $3.10 per million British thermal units (MMBtu) and in 2026 to average $4.00/MMBtu from the record low set in 2024.”
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(I have added the red line indicating Ukraine Invasion)
If you wonder why the new Administration is so negative on wind and solar
energy, and why the new Secretary of Energy is a Fracking executive, this is a clue.
Discuss.
Reuters:
President Donald Trump’s sweeping measures aimed at maximising U.S. oil and gas production mark a U-turn in energy policy from President Joe Biden’s term, and make it clear that Trump expects domestic fossil fuel production to rapidly rise.
But even with faster permitting for exploration and sales, the new Trump administration may struggle to boost U.S. gas output without help from local and international prices.
That’s because historically weak gas prices for electricity generation, not restrictive former policies, were the main factor in suppressing U.S. gas production in 2024.
If gas prices trend steadily higher in 2025, Trump’s hopes for higher gas output will materialise and will help propel U.S. energy product exports to new heights.
But higher gas prices would also go directly against Trump’s aims to lower energy costs, which were a major factor behind his successful election.
That presents a potential conundrum for Trump’s energy advisers who must now somehow motivate higher gas output without triggering higher energy prices for consumers.
HISTORIC DROP
U.S. gas output from shale and tight gas wells – which account for over 75% of total U.S. natural gas supplies – fell in 2024 for the first time in over a decade as average prices for gas used in electricity generation dropped to historic lows.
 The power sector is by far the largest gas consumer in the U.S., and accounted for around 43% of total gas use in 2024, according to the U.S. Energy Information Administration (EIA).
 Average prices received by gas producers from power firms were $2.77 per thousand cubic feet (Mcf) in January to October 2024, EIA data shows.
That compares to an annual average of $4.13 per Mcf from the same user base from 2013 through 2023, and means that some gas suppliers received 33% less for their gas in 2024 than they received over the previous decade from their top customer.
 For some high-cost gas producers, 2024’s average prices were the lowest received this century aside from 2020 – when COVID-19 stifled total energy use sparking output cuts and cost reduction measures at several production sites.
Production Trends
Going forward, all U.S. gas producers will be buoyed by the broad support for their sector shown by the new administration, but the shale sector will have the ultimate say over the scale of any output changes.
 The price pain for natural gas supplies is not just from the electricity sector, as the average prices received for LNG exports also dropped in 2024.
LNG export prices averaged $6.22 per Mcf in January to October of 2024, down 18% from 2023 and down 50% from 2022, EIA data shows.
Despite the lower average prices, U.S. LNG exports scaled a new record in 2024, expanding 1.1% on the year to just over 87 million metric tons, according to ship-tracking data from Kpler.
However, the configuration of U.S. LNG export flows in 2024 changed significantly from the prior year, and included a nearly 20% drop to top market Europe and a 30% rise to buyers in Asia.
Those swings in export volumes resulted in higher costs being incurred on voyages outside Europe, as the journey times to China and Japan are often over twice as long as to Europe.
And when combined with the lower prices received for LNG exports, those higher costs further tightened margins for gas sellers despite the overall climb in LNG export volumes.
In 2025, the Trump administration is expected to push for further growth in LNG exports to all regions, thanks in part to new expansions in LNG export capacity.
But with both Europe’s and China’s economies dogged by growth issues, consumer demand for LNG on the ground may remain tepid, which may keep LNG export prices subdued.
Steadily increasing electricity generation from renewables -which can produce power more cheaply than fossil fuels – may also serve to cap the prices that generation firms will be prepared to pay for natural gas.
In turn, these lower LNG and power generation prices may dissuade gas producers from increasing production, even as the Trump administration urges expansion.
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Below, energy use in California shows how solar (yellow), wind (blue), and Batteries (pink) are squeezing gas consumption for power. ( from Jenny Chase, solar analyst TED talk)
Standard & Poors Global:
The California battery fleet, consisting largely of systems designed to discharge for up to four hours, displaced an estimated 30 Bcf of natural gas through the first eight months of 2024, as much as in all of 2023, according to the analysis. That displacement amounted to 6% of power sector gas demand in the CAISO market through August, compared with 3.5% in 2023.
“The magnitude did surprise us a little bit because getting to 5% or 6% of gas burn is pretty significant, [and] getting to about 30% of total monthly gas burn in the spring was definitely quite high,” Gutierrez said. |
