Persistently High Electricity Costs Unrelated to Supply Chain Woes

While most small-medium businesses struggle with supply chain disruptions and higher costs, they’re also dealing with higher electricity prices. Across the U.S., electricity costs at least 20% more than it did a year ago. In some places it’s 80% more. Why?

As we related in January, natural gas drives electricity prices. Natural gas exports from the U.S. in 2021 shot up 50% compared to the year before. This is partly price-driven, because natural gas prices in Asia and Europe are always higher.

But there’s more to it than just prices. To sell to those faraway markets, the gas has to be liquified and transported in tankers. Liquifying gas requires huge and expensive facilities, and in the last 5 years the U.S. has built SEVEN TIMES more export capacity.

As a result, we’re now the world’s largest gas exporter–which pushes up domestic electricity prices. This upward pressure will be with us for years, because more export capacity has been built and even more is being built.

The silver lining is that renewable energy–already cheaper than fossil fuels for large companies–is now cost-effective for small-medium businesses, as well. Contact us if you’d like to learn more.