This summer, energy prices in the United States surged to their highest level in nearly fifteen years, 1 in 6 Americans are behind on utility bills. This is equivalent to more than twenty million households, and the federal government doesn’t expect prices to drop anytime soon. The same rings true across Appalachia, where power companies have announced that rising fuel costs will lead to increased bills for consumers. In Virginia, for example, the average residential customer will soon see their monthly bill increase by about fifteen dollars. Furthermore, these price hikes come at a time when federal moratoriums against utility shut-offs, instituted in response to the Covid-19 pandemic, are ending. Within the Appalachian region as a whole, where the mountainous terrain provides for some very cold winters, these increased energy costs pose a risk to many people who are in danger of having their power shut off, which would leave them without access to heat.

Natural Gas Shortages

According to the United States Energy Information Administration (EIA), “higher retail electricity prices largely reflect an increase in wholesale power prices driven by rising natural gas prices.” Appalachian utility companies such as Dominion and Appalachian Power, two primary electric providers in Virginia, attribute the rise in prices to several factors, including “the resurgence of the economy following the COVID-19 pandemic, inflation, and the ongoing war in Ukraine.” Prior to the war, Russia supplied much of Europe with cheap natural gas which powered factories and heated homes. After Western nations imposed sanctions on Russia for its part in the war, however, Russia cut off the supply—effectively weaponizing its natural gas (as one NPR writer puts it). So, while the global supply of natural gas has dropped, demand remains high, especially with winter months approaching.

In response to the demand for natural gas overseas, natural gas producers in the United States have been exporting large amounts of liquified natural gas that would normally remain in the domestic supply. This profit-driven incentive to export is one reason for higher natural gas prices in the United States. As one oil and gas expert with the Atlantic Council stated, "if the price they can get in Europe is a lot more than what they can sell their natural gas for in the U.S., then some of that is going to be exported to Europe, and that is going to raise the price of things in the United States.” There are those who argue that stepping up supplies to Europe is necessary, because “the European Union is a large trading partner, and major economic disruptions there could send aftershocks to the United States.” However, as natural gas prices hit a sixteen year high with no end in sight, the question remains whether shifting costs onto American citizens is a fair strategy.

Although natural gas exports from the United States have risen, it is reported that there is still a larger than expected supply of gas in storage. This is attributed to an explosion at a liquefied natural gas export facility in Texas, which uses about 2% of the U.S. gas supply. Because of the explosion, that gas has been redirected into the domestic market instead of being shipped overseas as usual. Two percent may not seem like a significant figure, but it may help slightly reduce the cost burden shifted onto consumers in response to heightened exports.

The Need for Energy Transition

Energy generation in the United States continues to remain heavily dependent on traditional fossil-fuels. The U.S. EIA estimates that gas currently fuels about 37% of U.S. generation (but is expected to drop to 36% in 2023), and that coal generators provide 21% of U.S. electricity in 2022 (but is expected to drop to 19% in 2023). Conversely, renewable resources currently provide about 22% of U.S. energy generation but are expected to increase to about 24% in 2023. Although these figures show that fossil fuel generation is slightly shrinking, while renewables will experience slight growth, one must wonder what the effects on consumers would be if a larger percentage of energy was not dependent on traditional fossil fuels. In Appalachia, these numbers are considerably more disproportionate. For example, Appalachian Power in Virginia reports that only about 6% of the power used by the company’s customers is generated by renewables. Because of this dependence on traditional energy generation, the rising cost of natural gas impacts consumers much more than in other regions of the country. As Dominion Power acknowledged, increased use of renewable energies such as solar and wind is one step in reducing fuel costs.

As natural gas prices continue to rise this winter, more and more families may not be able to afford their increased energy bills. This poses a special danger within Appalachia, where almost all energy generation is dependent on natural gas and other traditional fossil fuels. In today’s global economy, getting rid of dependency on natural gas will put the nation’s consumers in a better place when dealing with events such as the conflict in Russia.