After years of stable, low-cost natural gas that saw benchmark prices hover between US$2 and US$4 per million British thermal units, the United States faces a structural shift in its energy economy. New analysis from Wood Mackenzie, a global energy research and consultancy firm, indicates that the era of abundant cheap gas is ending.
The research projects that real-term prices for natural gas will gradually move toward US$5 per mmbtu by 2035, driven not by short-term weather patterns or temporary storage fluctuations, but by fundamental changes in both supply and demand.
Supply Constraints and Rising Demand Reshape the Market
Wood Mackenzie’s early findings show that the structural surplus that kept domestic gas prices low for years is being absorbed. On the supply side, the analysis points to a significant shift in production dynamics across major basins.
While the United States still holds enormous gas resources, the easiest and cheapest reserves have been tapped. New wells are costing more to drill and complete, and investors are demanding returns rather than growth. This capital discipline means supply is unlikely to outrun demand as it did in the past. Simultaneously, demand is rising from two major sectors: power generation and industrial users.
The combination of increasing consumption and constrained new development is rebalancing the market. The analysis describes this as a gradual but persistent trend rather than a sudden spike.
For producers, the encouraging aspect is that the new pricing floor appears to be driven by real economic forces, not transient events. Export demand for liquefied natural gas is identified as a key driver of the shift. As the United States sends more LNG to global markets, domestic prices become more tied to international benchmarks.
This is a structural change, not a cyclical one. The increased global integration means that U.S. consumers and businesses will feel the influence of worldwide energy pricing in a way they have not during the era of cheap domestic gas.
Consequences for Consumers and Calls for Efficiency
For the millions of Americans and businesses that rely on natural gas, the shift toward US$5 gas will have real consequences. The analysis notes that higher prices will ripple through electricity bills, manufacturing costs, and home heating expenses.
The research advises patients—in the context of budget planning—to talk to their utility providers about long-term fixed-rate options if they are concerned about predictability in their energy costs. However, the analysis also points to an upside: higher prices should incentivize efficiency. Industries that use gas will have stronger motivation to reduce waste and invest in modern equipment. Homeowners may find that insulation upgrades and efficient appliances pay off faster in a world where natural gas costs more.
The trend is clear, but the pace remains uncertain. Policy choices by the U.S. administration regarding export permits, drilling on federal lands, and pipeline approvals will influence how quickly prices adjust.
While no specific policy actions are mentioned, the research notes that these decisions matter for the speed of the transition.
Wood Mackenzie’s Longstanding Role in Energy Analysis
Wood Mackenzie began as a stockbroker in Edinburgh in the early twentieth century before shifting its focus in the following decades to energy and natural resources. Its first major industry research service launched in the 1970s with a review of North Sea oilfields, marking the start of its long-standing role in energy analysis. Over time, the firm expanded through acquisitions in coal, metals, chemicals, and renewables, building a broad research footprint across global commodities.
The ownership of the firm has changed hands several times. After periods under various financial institutions, Wood Mackenzie was acquired by Verisk Analytics in the mid-2010s, then taken private by a private-equity firm in the early 2020s.
These transitions highlight the increasing value of deep sector expertise as markets for energy and raw materials face structural shifts. Wood Mackenzie’s insights carry weight because they inform decisions by producers, investors, and policymakers navigating long-term changes in supply, demand, and pricing for critical resources.
