By Irina Slav – Dec 07, 2025, 6:00 PM CST
- U.S. LNG exports are hitting record levels, but rising domestic gas prices are squeezing exporter margins.
- Europe remains heavily dependent on U.S. LNG, yet weak economic conditions and falling European gas prices make it harder for exporters to pass on higher costs without risking demand destruction.
- Massive new U.S. liquefaction capacity and growing domestic gas consumption are expected to push margins back to “normal” levels.
U.S. exports of liquefied natural gas have been on a record-breaking streak this year, on track to book a 40% annual surge in November, thanks to strong European demand. There is just one problem: this strong demand is fueling higher prices; higher prices are eating into LNG exporters’ profits.
When European energy supermajors went after Venture Global, they accused the company of making billions on the spot market while violating its contracts with the supermajors. Venture Global did indeed make billions—and it wasn’t the only one. Europe suddenly found itself with 30% less pipeline gas imports and had to switch to LNG, whatever the price. This last part is important, because, since 2022, a lot has changed, and not for the better when it comes to the biggest market for U.S. liquefied gas.
The collective EU economy has not been doing very well in the past three years. Part of the reason, ironic as it is, is higher energy costs, made higher by transition-related taxing and the switch from pipeline gas to LNG. LNG cannot be on par with piped gas on price simply because its production is more complicated, adding to costs, similar to the cost difference between so-called grey hydrogen and green hydrogen; different production processes result in different prices.
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Now, a new aspect is emerging in the price dynamics of LNG: higher demand at home due to seasonal variations, and Big Tech’s rush to secure energy supply for future data centers is adding to record demand from LNG exporters. As a result, Henry Hub topped $5 per million British thermal units this week. This is certainly lower than the over $8 per mmBtu price the market witnessed in 2022, but it is also notably higher than the November average of $3.79 per mmBtu, not to mention the $2.12 per mmBtu that was the average for November 2024.
Higher prices could certainly be passed on to customers. Europe, for one, has little alternative to U.S. liquefied gas. First, because European buyers are still sceptical of long-term contracts, on which Qatar—the other big LNG supplier to Europe—insists, and second, because it has committed via the European Commission to buy $750 billion worth of U.S. energy commodities.
Yet there is a problem with passing the whole additional cost to customers: they might go broke and stop being customers. That’s just the crudest scenario,