Biden Administration Pauses LNG Permits, Citing Impact on Domestic Energy Costs

Last week, President Joe Biden announced a freeze on approvals for new liquefied natural gas (LNG) terminals exporting the fuel, sparking both approval and criticism. The decision to pause LNG permits is framed as an opportunity for the White House to assess the impact of LNG exports on energy costs, national energy security, and the environment. The move puts at least 17 export projects on hold while the US Department of Energy undergoes a comprehensive review of its approval processes.

Over the past eight years, the United States has become the world’s leading LNG exporter, with seven operating terminals capable of producing 87 million tonnes annually. An additional five projects, already approved and under construction, will add another 63 million tonnes of capacity. The decision to halt approvals has garnered support from climate activists who view these projects as symbolic of fossil fuel dependence.

Unlike opposition to oil pipelines and drilling, critics argue that limiting LNG exports could alleviate fuel costs for US households. Proponents of the pause, including Senator Elizabeth Warren, assert that exporting large quantities of natural gas could drive up domestic prices. The focus on costs comes at a time when Biden’s approval ratings are affected by inflation concerns, with the consumer price index at 3.4% in December.

Studies conducted over the years have generally concluded that the impact of rising LNG exports on US prices would be limited. Prices in the Henry Hub market along the Louisiana coast have averaged $3.37 per million British thermal units in the seven years since 2016, compared to $3.48 in the preceding seven years. Industry experts argue that the US has achieved significant energy security and is now exporting excess energy to other countries.

While the rapid growth of the export industry has provided an outlet for US gas production, concerns have been raised about potential reliability and price risks, especially during periods of peak demand. Some industry groups, including oil and gas producers and the American Gas Association, oppose Biden’s decision. A coalition of business groups from the US, Europe, and Japan has urged the president to reconsider.

This pause in LNG permitting is not unprecedented; President Barack Obama implemented a similar hiatus from 2012 to 2014. Analysts suggest that, considering ongoing studies and public comments, new licenses may not be issued until after May 2025. The decision is viewed by some as a strategic move to delay a showdown between supporters and opponents of LNG exports, providing time for a thorough evaluation of security, climate, and economic considerations.

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