# Gas pipelines and city gas: Unit economics

Why a half-empty pipeline is an expensive pipeline

Source page: https://www.materialinsights.org/energy/e_gas_pipelines/economics/

What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.

Pipelines are expensive to build but cheap to run, so cost per unit depends mostly on how full they are. Local distribution often costs more per unit than long-distance transmission.

#### Key costs

| Measure | Value | Note |
|---|---|---|
| **Build cost, global average of lines under construction** | about 2.8 million USD per km^[10](https://globalenergymonitor.org/report/global-gas-pipeline-expansion-nearly-us200-billion-under-construction-with-asia-building-over-80/) | 193.9 billion USD for 69,700 km, 2023 (calculated) |
| **Build cost, China and India** | about 1.2 and 1.45 million USD per km^[19](https://globalenergymonitor.org/report/china-india-lead-us534-billion-global-gas-pipeline-build-out/) | From GEM cost and length estimates at end 2022 (calculated) |
| **Compressor fuel per 1,000 km** | about 2.2 to 3.0% of gas carried^[21](https://www.ifeu.de/fileadmin/uploads/Publikationen/WPKS-Study_Analysis_of_the_greenhouse_gas_intensities_of_LNG_imports_to_Germany.pdf) | Life-cycle inventory values (calculated); the main running cost besides capital |
| **US citygate price, 2024** | 4.25 USD per thousand cubic feet^[23](https://www.eia.gov/naturalgas/Annual/pdf/table_022.pdf) | Price after long-distance transmission, at entry to local networks |
| **US residential price, 2024** | 14.50 USD per thousand cubic feet^[36](https://www.eia.gov/naturalgas/Annual/pdf/table_023.pdf) | So local distribution and retail add about 10.25 USD per Mcf, roughly 34 USD per MWh (calculated) |

#### Where the money goes

| Item | Share or amount |
|---|---|
| **Capital charge on pipe and stations** | The dominant cost of transmission: about 2.8 million USD per km to build (calculated)^[10](https://globalenergymonitor.org/report/global-gas-pipeline-expansion-nearly-us200-billion-under-construction-with-asia-building-over-80/) |
| **Compressor fuel** | About 3.9% of gas consumed in the US system (calculated)^[4](https://www.eia.gov/naturalgas/Annual/pdf/table_001.pdf) |
| **Local distribution and retail** | About 70% of the 2024 US residential price (calculated from citygate and residential prices)^[23](https://www.eia.gov/naturalgas/Annual/pdf/table_022.pdf)^[36](https://www.eia.gov/naturalgas/Annual/pdf/table_023.pdf) |

Because capital dominates, a full pipeline is cheap per unit and a half-empty one is costly; this is why owners want long contracts before building. Pipe lasts many decades if protected from corrosion. Moving the same energy as LNG means paying for liquefaction and burning roughly a tenth of the gas, so pipelines are usually cheaper over land, while LNG is more flexible over oceans.

#### Sources

1. [Natural Gas Annual, Table 1: Summary statistics for natural gas in the United States, 2020-2024](https://www.eia.gov/naturalgas/Annual/pdf/table_001.pdf) US EIA, 2025
2. [Global gas pipeline expansion: nearly US$200 billion under construction, with Asia building over 80%](https://globalenergymonitor.org/report/global-gas-pipeline-expansion-nearly-us200-billion-under-construction-with-asia-building-over-80/) Global Energy Monitor, 2023
3. [China, India lead US$534 billion global gas pipeline build-out](https://globalenergymonitor.org/report/china-india-lead-us534-billion-global-gas-pipeline-build-out/) Global Energy Monitor, 2023
4. [Analysis of the greenhouse gas intensities of LNG imports to Germany (Munter and Liebich), final report](https://www.ifeu.de/fileadmin/uploads/Publikationen/WPKS-Study_Analysis_of_the_greenhouse_gas_intensities_of_LNG_imports_to_Germany.pdf) ifeu for Wissenschaftsplattform Klimaschutz, 2023
5. [Natural Gas Annual, Table 22: Average citygate price of natural gas in the United States, 2020-2024](https://www.eia.gov/naturalgas/Annual/pdf/table_022.pdf) US EIA, 2025
6. [Natural Gas Annual, Table 23: Average price of natural gas delivered to consumers by state and sector, 2024](https://www.eia.gov/naturalgas/Annual/pdf/table_023.pdf) US EIA, 2025

## Other sections

- [Summary](https://www.materialinsights.org/energy/e_gas_pipelines/index.md)
- [Overview](https://www.materialinsights.org/energy/e_gas_pipelines/overview/index.md)
- [Correlation](https://www.materialinsights.org/energy/e_gas_pipelines/correlation/index.md)
- [How it works](https://www.materialinsights.org/energy/e_gas_pipelines/explain/index.md)
- [Efficiency and losses](https://www.materialinsights.org/energy/e_gas_pipelines/efficiency/index.md)
- [Technology advances](https://www.materialinsights.org/energy/e_gas_pipelines/advances/index.md)
- [Value chain](https://www.materialinsights.org/energy/e_gas_pipelines/valuechain/index.md)
- [Geopolitics and regulation](https://www.materialinsights.org/energy/e_gas_pipelines/geopolitics/index.md)
- [Impact on the biosphere](https://www.materialinsights.org/energy/e_gas_pipelines/biosphere/index.md)
- [Relationships](https://www.materialinsights.org/energy/e_gas_pipelines/links/index.md)