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/.