Despite the U.S. emerging as the world’s largest oil producer and a net exporter, consumers are finding out record U.S. production is little buffer against a global oil shock. U.S. oil, gasoline and diesel prices are surging from the conflict in the Middle East.

Surprisingly, domestic natural gas prices have not jumped. In fact, they’ve fallen.

Even as global natural gas prices spike from the closure of the Strait of Hormuz and the loss of Qatari liquified natural gas (LNG), the U.S. market has been mercifully untouched. In some parts of Texas, natural gas is even selling at negative prices. Producers are paying consumers to take it. How in the world is that possible during a global energy shock?

In short, while the oil market is global, meaning what happens in Iran has a direct effect in say Iowa, the market for natural gas remains local. And with the U.S. the world’s largest natural gas producer and largest LNG exporter, global gas upheaval has not yet breached U.S. shores.

But what is true today could very well not be true tomorrow.

Doubling Export Capacity

It would reason that as the world scrambles for more LNG, desperate overseas buyers will gobble up more and more U.S. natural gas and put inflationary pressure on domestic gas prices. But as the U.S. Energy Information Administration recently explained, U.S. gas export facilities were already running at high utilization before the crisis, “limiting the ability to export additional volumes in the near term.” In other words, export volumes are already at capacity.

This won’t always be the case. U.S. LNG capacity has been rapidly expanding and is set to double again by 2029. By the end of the decade, if not sooner, the U.S. will have so much export capacity that global price spikes will send immediate demand signals into the domestic market.   

Soaring Domestic Demand

The U.S. gas glut is also under immense domestic pressure. Natural gas is not only the leading fuel for heating in the U.S., but it is also the nation’s leading fuel for electricity generation, meeting 40% of demand in 2025. And surging power demand, led by the AI revolution and the hyperscale data center buildout, is on track to rapidly add to that tally.

Microsoft, Amazon, Alphabet and Meta – the four tech companies leading the development of hyperscale data centers – are combined spending $700 billion just this year on capital projects.

U.S. power demand is now poised to jump 25% by 2030 and new natural gas capacity will be used to meet much of it. Consider Meta’s massive Hyperion data center in Louisiana. Meta has reached an agreement to build 10 large natural gas plants to provide seven gigawatts of power for the facility – more than enough to power New York City on a typical day. Dozens more are already under construction or planned across the country.

Fuel Optionality Will be Critical

Economists are quick to observe low prices are the cure to low prices. That certainly seems to be the case with U.S. natural gas. Domestic natural gas demand is soaring at the very moment U.S. export capacity is doubling.

While it’s impossible to know where U.S. natural gas prices will land in the years ahead, ballooning demand underscores the importance of dispatchable fuel diversity.

If natural gas prices rise, or potentially spike from a global price shock, the ability to turn to another fuel will be critical to moderating the impact on the economy and U.S. consumers.

Today, the global pivot to coal from natural gas is underway as governments seek shelter from soaring prices. It’s a lesson we should not think ourselves so gas rich to dismiss.
The U.S. coal fleet has long been our price shock absorber, a safe haven to protect consumers from price spikes. There have now been two global gas shocks in four years, and there will be another. We’d be very wise to ensure we have the fuel optionality available to manage it.