America’s natural gas prices are rising, sending household energy costs spiking along with them. From 2024 to 2025 alone, gas prices rose 63 percent.[1] By 2027, they could jump another 30 percent as demand grows and the United States increases exports of domestic fuel to other countries.

Rising gas prices[2] are directly increasing consumer electricity bills: Power plants that burn natural gas to generate electricity make up roughly 40 percent of the U.S. electricity mix, but those power plants almost always set overall power prices. That’s in part because in wholesale electricity markets, where utilities buy power that gets resold to households and businesses, the amount it costs to run a gas plant often dictates how the price of electricity is set across the rest of the market. Utilities are also allowed to pass 100 percent of the cost of fuel to customers.

Put simply, when natural gas prices spike, the cost that consumers pay for power rises.

What is driving high gas prices today?

High natural gas prices are created by many factors including global conflicts, increasing domestic exports, extreme weather caused by climate change, and rising infrastructure and operating costs. At a high level, gas is a commodity that is easily impacted by volatile international markets—and in recent years, global conflicts have been particularly harmful to the market price for gas.

Global conflicts create fossil fuel volatility

Russia’s invasion of Ukraine in 2022 sparked an energy crisis across Europe as countries quickly tried to free themselves from their dependence on Russian gas. The resulting energy crunch sent reverberations across the globe. U.S. liquefied natural gas companies scrambled to fill the gap left by Russia by shipping fuel produced in the U.S. to other countries, tightening domestic supplies and sending natural gas and electricity prices soaring.[3]

The war in Iran has further exacerbated constrained supplies. The conflict shut down the Strait of Hormuz, which moves roughly 20 percent of the world’s oil and gas supplies.[4] But that’s not the end of the story. Many Middle Eastern processing and export facilities have been damaged and will require extensive repairs once hostilities end, and the war’s wider effects on oil prices may increase demand for natural gas,[5] further increasing upward pressure on prices.

Increased U.S. gas exports will push up consumer prices

Conflicts across the world have also led to a more aggressive push from U.S. gas exporters to increase the supply of fuel they can ship to foreign nations. The U.S. is already the largest exporter of natural gas––in 2025 alone, the nation exported roughly enough to heat 134 million American households. That export capacity and U.S. exposure to global price volatility has been limited because our LNG terminals are maxed out, but their export capacity is projected to nearly double[6] by the end of the decade, foreshadowing an era where the U.S. exports more gas than its citizens consume – and where prices rise domestically as well as internationally.

This level of exports increases consumer prices because as U.S. LNG companies increasingly tie themselves to the global markets, domestic consumers become less insulated[7] from international price shocks. A 2024 Department of Energy study[8] found that natural gas prices are expected to rise 31 percent by 2050 as exports continue to rise.

Extreme weather drives extreme consumer gas costs

Extreme weather can also drive huge swings in natural gas prices, due to a combination of poor weatherization, equipment failure, and increased demand. Winter Storm Uri in Texas sent spot natural gas prices rising ten-fold[9] after heating demand skyrocketed and gas equipment across the state failed. But it wasn’t just Texas that felt the shocks: Oklahoma customers were saddled with $4.5 billion in costs[10] following the storm, thanks to a week of high fuel prices that they’ll be paying for the next 25 years.

Smaller, relatively less destructive winter storms have taken their toll on the gas system as well. A period of cold weather at the start of 2026 sent spot market prices rising 40 percent month over month.[11] In Colorado, the state’s utility Xcel Energy warned that consumers would see bills rise because of tight gas supplies during this year’s winter storm, costing consumers up to a dollar per month extra for the rest of the year[12] due to the storm’s impacts alone. In fact, over the last four years, successive winter storms have caused major disruptions to natural gas production,[13] putting further pressure on prices.

Gas infrastructure, operating costs have risen

The cost of gas as a source of electricity has risen significantly in recent years because of growing infrastructure[14] and operational costs associated with building and running the gas plants themselves. The system that powers gas power plants is complex and expensive, requiring an extensive pipeline and distribution network alongside necessary grid infrastructure.

That means that even when commodity prices for natural gas drop slightly, high infrastructure costs could still keep prices high. As of February 2026, gas sent to utilities via pipelines jumped approximately 11 percent[15] compared to last year, while natural gas commodity prices remained slightly lower—suggesting the cost increase was driven by equipment costs, not the price of fuel.

Building the power plants themselves represents an enormous cost, particularly amid a growing backlog for gas turbine equipment. John Ketchum, the CEO of utility giant NextEra Energy, said that the cost for building new gas-fired plants has more than tripled,[16] jumping from $785 per kilowatt in 2022 for some facilities, to $2,400 three years later. And GridLab analysis reveals[17] upstream gas infrastructure costs add 30 percent or more to the cost of a gas power plant but are rarely included in the regulatory process to approve plants. GridLab also estimates[18] combined cycle gas turbine costs have increased from between $1,000 and $1,400 per kilowatt for projects nearly completion to over $2,000 a kW for recently commenced projects.

Running large, complex gas systems also comes with high costs[19] including fuel, personnel, and maintenance requirements. Resources like wind, solar, and battery storage, meanwhile, avoid those costs because they don’t require fuel to run and are essentially free to operate once built.

Where are high gas prices showing up in electricity bills?

Electricity consumers across the country are already seeing the consequences of high natural gas prices on their power bills.[20]

Last year, regional power grids that rely heavily on natural gas saw some of their electricity price spikes[21] closely tied to natural gas prices. Overall, the increase in gas prices drove year-over-year electricity price increases across 21 states, particularly those within those gas-heavy regions.

The New England Independent System Operator, for instance, which generates more than half its power from gas, saw prices rise 2.9 cents per kilowatt-hour, while New York, the PJM Interconnection—a region that covers Chicago to the Mid-Atlantic, and the Midcontinent Independent System Operator—which stretches from North Dakota to Louisiana—all saw prices jump as well.[22]

Without a significant shift away from natural gas dependency, consumers across the country will continue to pay the price for dependence on volatile global markets, aging infrastructure, and increasingly extreme weather—costs that advanced solutions like wind, solar, and battery storage could help avoid.

[i] Brendan Pierpont, “Why Are Natural Gas Prices So High?”, Substack, 2026, https://thepowerline.substack.com/p/why-are-natural-gas-prices-so-high.

[2] Edward Burgess, Maria Roumpani, Laura Burford,  Jordan Ahern, Alexandria Herr, and Erik Olson, “Beyond The Power Plant: The Hidden Costs Of Gas-Fired Generation,” GridLab, 2026, https://gridlab.org/hidden-cost-of-gas/.

[3] Brendan Pierpont, “Clean Energy Isn’t Driving Power Price Spikes,” Energy Innovation, 2024, https://energyinnovation.org/report/clean-energy-isnt-driving-power-price-spikes/.

[4] Alex Lawler and Arathy Somasekhar, “Iran War’s Energy Impact Forces World To Pay Up, Cut Consumption,” Reuters, 2026, https://www.reuters.com/business/energy/iran-wars-energy-impact-forces-world-pay-up-cut-consumption-2026-03-21/.

[5] Brendan Pierpont, “Why Are Natural Gas Prices So High?”, Substack, 2026, https://thepowerline.substack.com/p/why-are-natural-gas-prices-so-high.

[6] U.S. Energy Information Administration, “North America’s LNG Export Capacity Could More Than Double By 2029,” U.S. Energy Information Administration, 2025, https://www.eia.gov/todayinenergy/detail.php?id=66384.

[7] New York Independent System Operator, “Electricity Prices In New York,” New York Independent System Operator, 2026, https://www.nyiso.com/documents/d/guest/costs-behind-rising-electricity-prices-whitepaper/.

[8] U.S. Department of Energy, “Appendix B: Domestic Energy, Economic, And GHG Assessment Of U.S. LNG Exports,” U.S. Department of Energy, 2024, https://www.energy.gov/sites/default/files/2024-12/LNGUpdate_AppendixB_Dec2024.pdf.

[9] Dan Esposito and Eric Gimon, “The Texas Big Freeze: How A Changing Climate Pushed The State’s Power Grid To The Brink,” Utility Dive, 2021, https://www.utilitydive.com/news/the-texas-big-freeze-how-a-changing-climate-pushed-the-states-power-grid/601098/.

[10] Mike W. Ray, “2021 Winter Storm Uri Bonds Total Approximately $4.5B,” Southwest Ledger, 2024, https://www.southwestledger.news/news/2021-winter-storm-uri-bonds-total-approximately-45b-0.

[11] U.S. Energy Information Administration, “EIA Raises Natural Gas Price Forecast Following Increased Heating Demand Amid Severe Winter Weather,” U.S. Energy Information Administration, 2026, https://www.eia.gov/pressroom/releases/press583.php.

[12] Michael Booth, “Your Xcel Energy Bill Is Already Going Up Amid Colorado’s Current Winter Storm. Here’s Why.,” The Colorado Sun, 2026, https://coloradosun.com/2026/01/23/xcel-colorado-storm-price-increase-natural-gas/.

[13] U.S. Energy Information Administration, “Winter Storms Have Disrupted U.S. Natural Gas Production,” U.S. Energy Information Administration, 2024, https://www.eia.gov/todayinenergy/detail.php?id=61563.

[14] Edward Burgess, Maria Roumpani, Laura Burford,  Jordan Ahern, Alexandria Herr, and Erik Olson, “Beyond The Power Plant: The Hidden Costs Of Gas-Fired Generation,” GridLab, 2026, https://gridlab.org/hidden-cost-of-gas/.

[15] U.S. Bureau of Labor Statistics, “Archived Consumer Price Index Supplemental Files,” U.S. Bureau of Labor Statistics, 2026, https://www.bls.gov/cpi/tables/supplemental-files/home.htm.

[16] Georgina Mccartney, “NextEra Energy Expects 55% Jump In Global Power Demand Over The Next 20 Years, CEO Says,” Reuters, 2025, https://www.reuters.com/business/energy/ceraweek-nextera-energy-expects-55-jump-global-power-demand-over-next-20-years-2025-03-10/.

[17] Edward Burgess, Maria Roumpani, Laura Burford,  Jordan Ahern, Alexandria Herr, and Erik Olson, “Beyond The Power Plant: The Hidden Costs Of Gas-Fired Generation,” GridLab, 2026, https://gridlab.org/hidden-cost-of-gas/.

[18] GridLab, “The New Reality Of Power Generation: An Analysis Of Increasing Gas Turbine Costs In The U.S.,” GridLab, 2025, https://gridlab.org/portfolio-item/gas-tubine-cost-report/.

[19] Brendan Pierpont, “Why Are Natural Gas Prices So High?”, Substack, 2026, https://thepowerline.substack.com/p/why-are-natural-gas-prices-so-high.

[20] Energy Innovation,“U.S. Electricity Bills Are Rising Fast: Which States Are Paying More – And Why,” Energy Innovation, 2026, https://energyinnovation.org/expert-voice/u-s-electricity-bills-are-rising-fast-which-states-are-paying-more-and-why/.

[21] Ryan H. Wiser, Galen L Barbose, Will Gorman, Eric O’Shaughnessy, Sydney Forrester, Paul Donohoo-Vallett, Peter Cappers, Jeff Deason, Ryan Hledik, and Long Lam, “Retail Electricity Price Trends And Drivers: Data Update−2026 Edition,” Lawrence Berkeley Lab Energy Markets and Planning, 2026, https://emp.lbl.gov/publications/retail-electricity-price-trends-and/.

[xxii] Ryan H. Wiser, Galen L Barbose, Will Gorman, Eric O’Shaughnessy, Sydney Forrester, Paul Donohoo-Vallett, Peter Cappers, Jeff Deason, Ryan Hledik, and Long Lam, “Retail Electricity Price Trends And Drivers: Data Update−2026 Edition,” Lawrence Berkeley Lab Energy Markets and Planning, 2026, https://emp.lbl.gov/publications/retail-electricity-price-trends-and/.

The post Why Are Natural Gas Prices So High? appeared first on Energy Innovation.

America’s natural gas prices are rising, sending household energy costs spiking along with them. Projections estimate that by 2027, they could jump another 30 percent as demand grows and the United States increases exports of domestic fuel to other countries.
The post Why Are Natural Gas Prices So High? appeared first on Energy Innovation.[#item_full_content]

Consumers and government officials are increasingly worried America’s data center boom is a major reason for skyrocketing energy costs on households already struggling to pay their power bills.

It doesn’t help that the sudden surge in predicted energy demand[1] data centers are causing comes at an uncertain time for the power system. The growing cost risk facing consumers is being worsened by federal policy[2] that chooses to force old, expensive coal plants to stay online past their planned retirements while blocking investments utilities were choosing to make in cheaper, cleaner resources.

How much consumers end up paying for the surge in data centers[3] will depend largely on how the United States chooses to meet this moment of rising demand for electricity.

Doubling down on fossil fuels will guarantee consumers continue paying rising energy bills for years to come. Adding new domestic clean energy resources to meet growing energy needs,[4] on the other hand, can save households billions of dollars by the end of the decade alone.

Clean energy is the lowest way to meet surging demand

The fossil fuel industry says dirty, outdated technologies are the only way to meet data center demand and keep the grid safe. But the reality is that we have abundant clean energy solutions just waiting to be used—and all are cheaper for consumers.

Accelerating clean energy deployment could save consumers at least $5.1 billion annually by the end of the decade, compared to a scenario where policymakers continue to keep us dependent, shackle us??  on coal and gas, according to new modeling analysis from Energy Innovation.[5]

By contrast, meeting that demand with mostly fossil fuels will cost consumers $29.7 billion by 2030—and could cost even more under a scenario where coal and gas prices continue to spike. In total, expanding clean energy development to meet rising demand reduces costs by at least 17 percent, relative to meeting that demand with fossil fuels.

The bottom line is clean energy remains cheaper and less risky than fossil fuels and they can come online fast enough to meet the need. Expanding clean electricity ensures economic growth and reliable power for the future, while avoiding the risk of volatile fossil fuel prices, which spike whenever extreme weather hits or international conflicts break out. It also guarantees a lower-risk investment if projected data center demand growth does not materialize––both by avoiding the additional costs of fossil fuels and by increasing the efficiency of how data centers are operated.

Protecting customers from volatile fossil fuel prices

Geopolitical turmoil and extreme weather events often send coal and gas prices climbing, which raises the overall electricity costs consumers pay. That’s because coal and gas are traded commodities whose price fluctuates dramatically[6] based on even small shifts in supply and demand.

Under a model where fuel prices spike to levels consistent with historic trends,[7] the U.S. risks saddling consumers with even higher costs. Volatile fuel prices could send prices surging to $40.5 billion per year under this modeling scenario, while clean energy investments reduce those costs by 21 percent, saving consumers $13.5 billion annually.

Several examples of these price spikes exist in recent history. The 2022 Russian invasion of Ukraine drove European gas prices to record highs, which in turn drove up U.S. gas prices as domestic producers rushed to capitalize on high overseas prices—tightening supply at home. The increase in gas prices also sent coal fuel costs surging as the market adjusted to compete with higher rates.

Just four years later, the Strait of Hormuz closure[8] due to the war in Iran has sent oil prices surging, and once again worsened fuel prices across the board.

Extreme weather—particularly extreme cold snaps—drive up fuel prices as well. In the U.S., several recent winter storms have shown how cold weather can both drive-up demand for fuel as consumers rush to heat their homes, while tightening supply as some wells and pipelines shut down during freezing conditions.

Winter Storm Uri[9] struck the South-Central U.S. in 2021, causing gas prices to surge to as much as 100 times above typical levels in the region. In some cases, those effects will be felt for decades to come. Oklahoma customers, for instance, will pay $4.5 billion over the next 25 years[10] from that storm alone.

Meanwhile, clean energy resources like wind, solar, energy efficiency, demand response, and storage avoid fuel costs altogether,[11] bypassing the global volatility that comes with coal and gas plants.[12]

Keeping risk low if demand does not materialize

No single, reliable estimate exists for exactly how fast and how much electricity demand will grow. Plans to build data centers across the country have already been delayed or scrapped entirely because of stalled supply chains, issues connecting to the power grid, and local resistance.

This leaves policymakers with a major conundrum: If we need new generation to meet rising demand, we must make those decisions now given the long lead time to build new power infrastructure and the risks of costs rising if demand far outpaces supply. But overbuilding fossil fuel power generation could leave consumers on the hook for expensive grid infrastructure that ultimately wasn’t needed.

A system that prioritizes clean energy resources reduces overall system demand and avoids high fuel costs – it’s the lowest-risk approach to meeting uncertain demand projections. Investing in resources like energy efficiency and demand response complement clean energy, lowering stress on the grid system while avoiding the capital-intensive costs associated with building massive new power plants. Adding cheaper wind and solar resources to the grid, meanwhile, guarantees new generation resources provide power at the lowest possible price.

In fact, under a scenario where just 33 percent of demand is realized, a system that prioritizes clean energy saves $2.6 billion over one that favors fossil fuels.

Reliably, cost-effectively meeting demand growth even under grid stress

Power systems that includes a diverse portfolio of resources—new sources of solar, wind, and energy storage, alongside existing coal, gas, nuclear, and hydropower—is the best suited to meet high demand, even during the most challenging grid conditions.

But America is not meeting the moment. The country’s largest electricity market, PJM Interconnection,[13] failed to secure enough generation to meet its reliability targets in its latest auction, despite record high prices intended to bring more generation online. Meanwhile, the process to connect new resources to the grid system remains congested across the country, with resources sitting in limbo for an average of five years before they can start providing power.

Meanwhile, extreme weather hits harder each year. Severe winter weather[14] and rising heat are sending the grid to new records of system stress. But Energy Innovation modeling[15] found that a diverse portfolio of resources that expands clean energy capacity and retires uneconomic fossil fuel plants is well suited to reliably provide power at the best price possible.

How policymakers can encourage competition and cut red tape

Elected officials have many tools in their toolbelt to ensure our country can meet rising demand from data centers as cheaply as possible, and insulate their constituents from rising energy bills as much as possible.

Policymakers should stay committed to ambitious clean energy targets and cut red tape to building and connecting new resources to the grid, bringing them online as efficiently as possible. They can also help improve system planning to ensure states and grid operators are working with the most up-to-date cost and demand data possible. Better data can maximize resource competition to ensure the cheapest resources are built first, then help coordinating with other regions as needed.

Policymakers should also squeeze more generation out of existing grid infrastructure through energy efficiency, demand response, and advanced transmission technologies. We can help cut rising demand even more through transparent system planning that identifies efficient demand reduction and encourages virtual power plants. Finally, we can manage fuel price risks, including cost sharing mechanisms that can incentivize utilities to better manage that risk.

Overall, government officials have many levers to pull that can ensure the U.S. meets rising data center demand without harming consumers – and an obligation to best serve their constituents.

[1] U.S. Energy Information Administration, “New U.S. Electric Generating Capacity Expected to Reach a Record High in 2026,” U.S. Energy Information Administration, 2026, https://www.eia.gov/todayinenergy/detail.php?id=67205.

[2] Robbie Orvis and Dan O’Brien, “Economic, Consumer Cost, and Pollution Impacts of Federal Energy Policy Changes,” Energy Innovation, 2026, https://energyinnovation.org/report/economic-consumer-cost-and-pollution-impacts-of-federal-energy-policy-changes/.

[3] Arman Shehabi et al., “United States Data Center Energy Usage Report,” Lawrence Berkeley National Laboratory, 2024, https://escholarship.org/uc/item/32d6m0d1.

[4] Tyler Norris et al., “Rethinking Load Growth: Assessing the Potential for Integration of Large Flexible Loads in US Power Systems,” Duke University Nicholas Institute for Energy, Environment, & Sustainability, 2025, https://nicholasinstitute.duke.edu/publications/rethinking-load-growth.

[5] Brendan Pierpont, Matthias Fripp and Michelle Solomon, “Let The Sun In: Clean Energy Is The Cheapest Way To Meet Rising Demand,” Energy Innovation, 2026, https://energyinnovation.org/report/let-the-sun-in-clean-energy-is-the-cheapest-way-to-meet-rising-demand/.

[6]  U.S. Energy Information Administration, “Natural Gas,” U.S. Energy Information Administration, 2026,  https://www.eia.gov/dnav/ng/hist/rngwhhdD.htm.

[7] Brendan Pierpont, “Why Are Natural Gas Prices So High?”, Substack, 2026, https://thepowerline.substack.com/p/why-are-natural-gas-prices-so-high/.

[8] Sonali Deshpande, “Iran War Energy Price Spikes Threaten America’s Industry,” Substack, 2026, https://thepowerline.substack.com/p/iran-war-energy-price-spikes-threaten/.

[9] Mike W. Ray, “2021 Winter Storm Uri Bonds Total Approximately $4.5B,” Southwest Ledger, 2024, https://www.southwestledger.news/news/2021-winter-storm-uri-bonds-total-approximately-45b-0.

[10] Mike W. Ray, “2021 Winter Storm Uri Bonds Total Approximately $4.5B,” Southwest Ledger, 2024, https://www.southwestledger.news/news/2021-winter-storm-uri-bonds-total-approximately-45b-0.

[11] Brendan Pierpont, “Clean Energy Isn’t Driving Power Price Spikes,” Energy Innovation, 2024, https://energyinnovation.org/report/clean-energy-isnt-driving-power-price-spikes/.

[12] Michelle Solomon, “Coal Power 28 Percent More Expensive In 2024 Than In 2021,” Energy Innovation, 2025, https://energyinnovation.org/report/coal-power-28-percent-more-expensive-in-2024than-in-2021/.

[13] Jason McGovern, “PJM Auction Procures 134,479 MW of Generation Resources,” 2025, https://insidelines.pjm.com/pjm-auction-procures-134479-mw-of-generationresources/.

[14] Silvio Marcacci, “Fossil Fuels Failed During Winter Storm Fern,” Substack, https://thepowerline.substack.com/p/fossil-fuels-failed-during-winter/.

[15] Brendan Pierpont, Matthias Fripp and Michelle Solomon, “Let The Sun In: Clean Energy Is The Cheapest Way To Meet Rising Demand,” Energy Innovation, 2026, https://energyinnovation.org/report/let-the-sun-in-clean-energy-is-the-cheapest-way-to-meet-rising-demand/.

The post The Affordable Way to Meet Rising Electricity Demand appeared first on Energy Innovation.

Consumers and government officials are increasingly worried America’s data center boom is a major reason for skyrocketing energy costs, thankfully there are a number of options for government officials to consider to ensure that the U.S meets the demand without harming customers.
The post The Affordable Way to Meet Rising Electricity Demand appeared first on Energy Innovation.[#item_full_content]