Natural Gas Harms US Economy And Won’t Solve Rising Electricity Demand

Remember the era of cheap natural gas? Yea, that world is gone.

Utilities and tech companies may be clamoring to build new gas-fired power plants to meet rising energy demand, but no matter how much they envision gas as a solution, there’s no escaping gas’s expensive, bad-for-the-climate reality. Anyone harboring the illusion of low-cost gas is operating as if it’s still 2015.

“I think people have in their minds that gas is a cheap way to generate power”, said Rich Powell, CEO of trade group the Clean Energy Buyers Association. “New build natural gas is not a cheap way to generate electricity.”

Today, gas’s economics are facing pressure on two fronts: Supply chain bottlenecks and workforce shortages have made it nearly impossible to source equipment for new gas-fired power plants in the near to medium term while also raising the costs of those plants. And gas as a fuel is becoming more expensive as global demand for liquified natural gas intensifies and the United States exports more of the fossil fuel instead of keeping it within our borders to meet American demand.

The shale revolution did usher in an era of cheap gas that reshaped the U.S. energy landscape, with gas overtaking coal in electricity generation around 2016. However, in recent years, new natural gas plants have constituted a small share of new capacity additions to the overall U.S. electricity mix.

In fact, since the 2018 surge, nearly every megawatt of new generation added to the grid has been clean energy—96% of new power in 2024 and 85% in 2023. That’s largely because for more than half a decade, renewables have been the cheapest sources of new electricity.

A gas buildout would look different this time

The big surge of new U.S. gas-fired power plant additions came in the early 2000s, before leveling off to a more moderate pace where the slowdown triggered several reactions that could make it hard to quickly build new gas plants today.

It turns out building gas plants is a use-it-or-lose-it skill.

Gas turbine manufacturers such as GE Vernova and Siemens Energy scaled back their production capabilities to meet lower demand, and output can’t be increased overnight. As a result, new gas turbine orders face a wait time of five to seven years before they can be delivered to utilities.

“Gas turbines were dead in 2022,” Siemens Energy North America President Rich Voorberg said at a recent conference, noting the company had been down to one customer.

Additionally, the slowdown in gas plant construction led to a brain drain, with NextEra CEO John Ketchum explaining much of the workforce that built the early 2000s boom has retired or moved to other fields, leaving behind a serious labor shortage.

Because of these factors, not only will it take years to build more natural gas-fired power plants, they’ll also be more expensive this time around. NextEra’s Ketchum estimates building a new plant today would cost three times as much as the last facility the utility built, back in 2022.

Others agree. “We did a quote and to do the same kind of unit that had been built a few years back it would be two and a half times more today,” Paul Sotkiewicz, president and founder of consultant E-Cubed Policy Associates.

He’s not alone in this sentiment.

“We are seeing substantial increases in the estimates for new builds, including everything from the cost of engineering, procurement and construction to the cost of equipment and materials,” said Bobby Noble, senior program manager for Gas Turbine Research and Development at EPRI.

The fuel to run gas plants costs more too

Then there’s the other side of the coin—not only will it cost much more to build a natural gas plant in today’s world, but the fuel that plant will burn is becoming significantly more expensive. The U.S. Energy Information Administration predicts Henry Hub prices—the main benchmark for natural gas prices—will increase by 43% in 2025 and another 27% in 2026. Increased natural gas demand from growing liquified natural gas exports is a primary driver for these cost increases, according to the EIA.

It’s a textbook Econ 101 example—exporting LNG abroad where natural gas prices are much higher raises demand for U.S.-produced gas. And when demand goes up, so does the price.

“It is not clear how both the AI and LNG export boom, both of which need prodigious volumes of gas, can succeed without provoking price spikes,” Gas Outlook recently reported.

“The explosion of (LNG) exports has upended domestic energy markets … and has exposed American energy markets to increased price volatility and episodes of sharply higher prices,” said Tyson Slocum, director of Public Citizen’s energy program.

The “One Big Beautiful Bill Act” makes the problem even worse

There’s no question U.S. electricity demand will increase in the coming years, although exactly what the rate of growth will be remains an open question. But relying on natural gas to fill the gap over at least the next five years appears to be both a foolhardy and highly expensive gamble. Instead, we should be increasing the pace of wind, solar, and storage buildout, as these technologies are currently the fastest, most affordable ways to add more power to the grid. Unfortunately, Congress just built a giant roadblock for clean energy.

The new One Big Beautiful Bill Act repeals renewable energy incentives and puts in place overly complicated supply chain constraints, killing many of the domestic clean energy projects that had been projected to come online over the next few years. That will increase wholesale electricity costs by 74% over the next decade, according to Energy Innovation analysis. Over same time period, 340 fewer gigawatts of clean energy would also not get built.

Thus, we face a scenario where we need more power quickly, can’t get the materials or staff needed to build new gas plants that would be wildly expensive anyway, and we’re taking big chunks of fast, cheap clean energy off the table.

That’s a great blueprint for losing the AI race and making America expensive again.