The Era Of Super Cheap Natural Gas Is Ending

Soaring LNG exports and power demand for AI are driving up natural gas prices. Here’s a deep dive into the gas market, with nine charts.

A drilling rig operating in North Dakota in 2011. Credit: Wikimedia.

Over the past 15 years or so, thanks to the shale revolution, American consumers have saved untold billions of dollars on gasoline, diesel fuel, and natural gas. The natural gas story is particularly significant. Since 2005, domestic natural gas production has more than doubled, and the inflation-adjusted price of gas has fallen like a rock. In 2023, the spot price for gas at Henry Hub, America’s main gas trading point, was $2.50 per million Btu. In 2024, that price fell to $2.20 per MMBtu. For comparison, the inflation adjusted price of gas (2024 dollars) in 2010 was over $6 per MMBtu.

About 35% of all US primary energy now comes from natural gas. (Oil provides about 39%). Given the US economy’s heavy reliance on gas, it’s evident that low-cost gas has been a key factor in the resilience of the US economy over the past decade. Furthermore, that same flood of gas has turned the United States from a prospective importer of liquified natural gas to the world’s largest LNG exporter.

But the ongoing boom in LNG export capacity, combined with Big Tech’s insatiable demand for the juice it needs for AI, is fueling an unprecedented surge in demand for gas. Analysts and pipeline companies are predicting that US gas demand could jump by about 25% between now and 2030.

Will the US drilling industry be able to meet that demand? Tens of billions of dollars are riding on the answer to that question. Here’s a deep dive into the US gas sector, with nine charts.