EIA Sees Record U.S. Natural Gas Demand in 2025
The U.S. Energy Information Administration (EIA) projects that natural gas consumption will reach record levels in 2025, driven by steady demand from power generation and industrial activity. The forecast, published in the agency’s Short-Term Energy Outlook, highlights how utilities, midstream operators, and liquefied natural gas (LNG) exporters may benefit from higher volumes, while also underscoring the challenges of balancing supply, infrastructure, and pricing.
What the EIA Forecast Shows
The EIA expects U.S. natural gas consumption to average 91.3 billion cubic feet per day (Bcf/d) in 2025, up from 90.5 Bcf/d in 2024, according to Gas Processing News. Demand is projected to remain elevated into 2026, with LNG exports and industrial use offsetting slower growth in residential and commercial consumption.
The agency also forecasts that U.S. marketed natural gas production will average 117.1 Bcf/d in 2025, a record high. This reflects steady output from shale basins, though growth is expected to slow in oil‑linked regions such as the Permian.
Prices are expected to rise modestly. The Henry Hub benchmark is projected to average $3.50 per million British thermal units (MMBtu) in 2025, compared with $2.91/MMBtu in August 2025, according to the EIA’s September update. Seasonal peaks could push prices above $4.50/MMBtu during the winter heating season.
Drivers of Higher Demand
Power Generation
Natural gas remains the dominant fuel for U.S. electricity generation, accounting for about 40 percent of the power mix. As coal plants continue to retire and renewable capacity expands, gas is expected to play a balancing role, providing reliable supply during periods of high demand or low renewable output.
Industrial Use
Industries such as chemicals, fertilizers, and steel rely heavily on natural gas as both a feedstock and an energy source. The EIA projects steady growth in industrial consumption, supported by competitive U.S. gas prices relative to global benchmarks.
LNG Exports
LNG exports are a major growth driver. The U.S. is expected to export 14.6 Bcf/d in 2025, up from 11.9 Bcf/d in 2024, with new facilities such as Plaquemines Phase 2 and Corpus Christi Stage 3 expanding capacity. By 2026, exports could reach 16 Bcf/d, according to S&P Global.
Implications for Utilities and LNG Operators
Utilities
For utilities, higher gas demand means careful planning around peak pricing and capacity. While renewables continue to expand, natural gas remains essential for grid reliability. Utilities may face margin pressure if pipeline constraints or weather events drive up spot prices.
Midstream Companies
Pipeline and storage operators stand to benefit from higher throughput, but infrastructure bottlenecks could limit gains. Regional constraints, particularly in the Northeast, may create localized price volatility.
LNG Exporters
LNG operators are positioned to capture strong global demand, especially from Asia and Europe. However, margins will depend on global LNG spreads, shipping costs, and competition from other exporters.
Risks and Market Sensitivities
While the outlook points to record demand, several factors could alter the trajectory:
Weather
Mild winters or cooler summers could reduce heating and cooling demand, lowering consumption. Conversely, extreme weather could tighten supply and push prices higher.
Pipeline Constraints
Infrastructure limitations in key producing regions may restrict flows, leading to regional price spikes.
Global LNG Markets
If global LNG demand weakens or new supply comes online faster than expected, U.S. exporters could face narrower margins.
Policy and Regulation
Environmental regulations and state-level policies could influence the pace of gas‑fired power generation and infrastructure development.
What Investors Should Watch
For investors, the EIA’s outlook highlights several themes:
- Utilities: Monitor how companies manage exposure to volatile gas prices while integrating renewables.
- Midstream: Track pipeline expansions and storage capacity, particularly in regions with high demand growth.
- LNG: Follow export capacity additions and global demand trends, as these will shape earnings trajectories.
- Commodities: Keep an eye on Henry Hub pricing and seasonal volatility, which affect both producers and consumers.
The EIA’s projections suggest that natural gas will remain a cornerstone of the U.S. energy mix through 2025 and beyond. While renewables continue to expand, gas provides the flexibility and reliability needed to balance the grid and support industrial activity.
