The conflict in Iran has treated the country to a masterclass on how poor energy policy impacts citizens. The U.S. national average residential electricity rate increased 7.4% year-over-year and the national average commercial electricity rate increased 5.8% year-over-year.

A convenient argument is to point to overreliance on oil and gas. Oil and gas are traded on global markets, leaving prices subject to international volatility and global supply chain disruption.

But reliance on hydrocarbons is not the reason energy prices are high. Bad policy is.

Look at California’s electricity prices. With an average monthly utility bill of $304, California’s rates are 87% above the national average. Burdensome regulatory regimes and clean energy mandates keep prices high. The California Legislative Analyst’s Office estimated that Renewable Portfolio Standards were responsible for a nearly 5% increase in overall retail electricity rates in California in 2020.

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Following suit, Virginia is re-entering the Regional Greenhouse Gas Initiative (RGGI) on July 1, which will saddle its residents with higher electricity rates. Finally, New York’s Climate Leadership and Community Protection Act’s estimated net cost increase is $2,500 for upstate households. As for New York City households, it is about $1,500. Such dramatic price increases forced Gov. Hochul to amend the act in an effort to reduce these regulatory burdens.

State policy is not the only actor to blame. Federal regulations create another level of burdensome regulations across the country. Under the National Environmental Protection Act (NEPA), projects face long review processes. Even with a two-year deadline on the completion of an Environmental Impact Statement (EIS), 61% of EIS continue to take more than two years to complete with nearly 25% taking over five years. These timelines do not include litigation, which can extend timelines into double digits.

Litigation of these projects is common even after a permit is issued. Between 2005 and 2025, over two-thirds of fossil fuel projects with at least $500 million in capital investment requiring federal permits faced potential litigation under NEPA, the Endangered Species Act (ESA), or the Clean Air and Water Acts. About 40% of the challenged projects were canceled or indefinitely delayed such that companies could not bear the regulatory limbo.

These projects would have increased reliable energy supply. Instead, supply is artificially constrained. Constraining supply is the last thing politicians and bureaucrats should be doing. When supply is constrained, markets struggle to adjust, and prices settle at a higher point. If producers are free to expand output and adjust to changing conditions, markets can absorb disruptions over time, and prices will shift back down more quickly.

Producers must have that flexibility to accommodate the need for more energy generation. U.S. electricity demand is expected to grow 25% by 2030.

As the world’s top gas producer and exporter of liquified natural gas, the U.S. can meet this demand—if generation is allowed to keep up. The Northeast produces about one-third of U.S. gas and is home to the largest gas reserves in the U.S. However, existing pipelines are nearly full, and legal and regulatory battles have stalled or canceled construction of many new lines. This makes transporting gas to market a challenge, leading to almost flat growth in expected production this year.

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When the permitting and regulatory process staunches supply from one of the most abundant sources of energy in the U.S., it is no surprise that concerns over reliability and cost increase.

Multiplying these concerns is the boom in data center construction. Data center electricity use is projected to be almost 12% of forecasted electricity use in 2030. The North American Electric Reliability Corporation issued warnings about future grid reliability, particularly due to forced transitions to renewable energy before the proper infrastructure is in place. These mandates for “green” energy sap the grid of its reliability, driving prices of electricity up in the face of new demand.

Investing in domestic energy resources and reliance on hydrocarbons are not to blame for high electricity prices or grid reliability issues. Piling on regulatory burdens and forcing premature transitions to renewable energy are. Free enterprise does not guarantee that our economy will not face challenges, but it does allow us to adjust more efficiently.

Until policymakers focus on removing the barriers that keep affordable, reliable energy off the grid, and prevent providers from meeting growing electricity demand, hardworking Americans will continue paying more for less.