U.S. Natural Gas Prices Poised to Climb Amid AI Boom, LNG Exports

U.S. natural gas prices, historically low for a decade, are projected to rise through 2035, according to analysts at Wood Mackenzie. This shift marks the potential end of an era defined by Henry Hub prices largely oscillating between $2 and $4 per million British thermal units (MMBtu). The primary drivers of this anticipated price appreciation are twofold: the escalating demand from the rapidly expanding artificial intelligence (AI) data center sector and the continued buildout of U.S. liquefied natural gas (LNG) export infrastructure. These factors are expected to create a robust demand environment that will likely outpace the supply dynamics that have characterized the last ten years. From 2015 to 2025, U.S. natural gas production saw significant growth, stemming from both dedicated gas plays and increased associated gas output from oil production. This prolific supply, particularly from shale formations, kept domestic prices subdued, offering a competitive advantage to U.S. industries and consumers. However, the structural increase in demand from data centers, which require substantial energy for operation and cooling, alongside the strategic expansion of LNG terminals to serve global markets, is set to fundamentally alter the supply-demand balance. As more U.S. gas is committed to these long-term demand centers, domestic price stability at current low levels is becoming increasingly unsustainable. This anticipated upward trajectory in prices will have implications for energy-intensive industries and could influence broader inflation metrics, particularly within the electricity generation sector.