The future of America’s natural gas economy

The US natural gas industry has transformed from being just a transition fuel to becoming a central pillar of the economy. Today, it is the largest source of power generation and influences global energy markets, climate transitions, and geopolitics.

The US now leads the world in oil and natural gas production, with shale accounting for more than 80% of recent output. Vast reserves, low production costs, and strong export momentum ensure its role as a net energy exporter for years ahead. Since 2019, oil and gas exports have risen by 8% annually, while imports have fallen steadily.

Three key growth drivers

1. Gas-powered electricity. Around 44% of the US’s electricity generation is powered by natural gas; the source of electricity has been shifting from coal to gas due to better economics, lower emissions, and faster ramp rates. Demand is now accelerating again as data centers proliferate. By 2028, cloud computing could account for most of the country’s incremental electricity needs.
2. LNG exports. In 2023, the US became the largest exporter of liquefied natural gas (LNG), supplying to more than 45 countries. Export volumes are expected to grow by 60% over time. Canada’s emerging LNG capacity could add 45 million metric tons annually by 2035, meeting global demand that will rise 2–4% annually through 2040.
3. Industrial use. Industrial consumption rose 28% from 2010 to 2024, with the chemical sector doubling usage as it took advantage of low-cost feedstock. Demand is concentrated in five states, where gas is vital for manufacturing, mining, and agriculture.

Five possible futures

• Blue rush – Demand growth supported by adequate supply and infrastructure; balanced pricing benefits both producers and consumers.
• America first – High domestic prices trigger policy shifts to restrict exports and prioritise US consumption.
• Export rush – Weaker domestic power demand drives exports as the primary growth engine.
• Slow burn – Growth slows due to supply chain issues, rising costs, and regulatory hurdles.
• Energy security – International buyers look elsewhere, curbing exports while domestic demand also weakens.

None of these paths indicates a near-term peak in US natural gas demand or supply. Across all futures, reducing costs and remaining agile are essential strategies.

Constraints and challenge

Despite more than $250 billion in investment since 2010, infrastructure—pipelines, storage, and generation—remains a bottleneck, causing supply-demand mismatches and price swings. Inflation, labor shortages, tariffs, and long equipment lead times inflate project costs. Coal could re-emerge as a competitor if gas prices exceed $3 per million BTUs and policies ease coal plant construction. Yet, gas remains cleaner, emitting 40% less CO₂ and requiring significantly less capital than coal.

Strategic options for industry players

With growth on the horizon, natural gas companies must sharpen their strategies:

• Upstream firms can maximise margins by delivering turnkey power solutions for large data centers or monetising stranded gas with modular solutions for smaller facilities.
• Midstream operators benefit from infrastructure proximity, offering reliable behind-the-meter power and load balancing for data centers.
• LNG players will continue to evolve existing business models to adapt position across the LNG value chain and enhance commercial and trading capabilities to maximise value capture
• Power generation players can innovate with behind-the-meter services, energy-as-a-service, storage, analytics, and equipment solutions.

The road ahead

The industry faces a paradox of global opportunity constrained by local bottlenecks. Growth will depend on how effectively companies handle infrastructure gaps, decarbonisation pressures, and shifting geopolitics.

While natural gas M&A may cool in 2025, consolidation will help midstream firms better meet soaring data center demand. Overall, the sector will neither experience an unchecked boom nor a steep decline. Instead, it will remain a cornerstone of the US energy mix, supported by power, industrial, and export markets.

For leaders, the challenge is to remain agile and adaptable. Those who navigate today’s constraints while innovating business models will not just benefit from America’s natural gas boom but also help shape a more sustainable global energy future.