INSIGHTS

On July 20, 2026

AAM Viewpoints — In the U.S. Natural Gas Boom, Both Consumers and Producers Win

Since the first well was dug in Fredonia, NY in 1821, natural gas has been powering homes and businesses across the United States. The hydraulic fracturing boom that took root early in the 21st century drove record natural gas production each year from 2007 through 2013. In the early stages of the boom, producers thrived; but by early 2013, supply had outrun demand and the pipeline capacity to deliver it, and prices plummeted.

The beneficiaries of low prices have been U.S. residential consumers and factories powered by natural gas. Despite the energy cost advantages provided by low-cost fuel in the U.S., manufacturing businesses continued to move offshore, seeking lower-cost manufacturing jurisdictions.

The pandemic in 2020 highlighted the supply chain risks many U.S. companies took on by offshoring operations. The result has been an acceleration of companies seeking to re-shore manufacturing operations back to the U.S. or to onshore new operations. Access to the largest consumer market in the world, a steady and attractive tax regime, and uncertain global tariffs have all contributed to this shift — but the appeal of low-cost energy is a winning story for manufacturing businesses in its own right.

According to the U.S. Energy Information Administration (EIA)'s most recent Manufacturing Energy Consumption Survey (MECS), natural gas made up 41% of total manufacturing fuel use, and 16% of total manufacturing energy use as a feedstock — meaning gas isn't just burned for heat and electricity, it's also a raw material input, mainly for chemicals like ammonia, methanol, and plastics precursors. Natural gas is also the dominant fuel for manufacturers' own on-site power: it made up 90% of the fuel used in manufacturers' combined heat and power (CHP) systems, and about 96% of electricity generated on-site by manufacturers came from these CHP systems. The benefit of locating gas-hungry manufacturing plants near low-cost natural gas sources is a genuine economic imperative.

U.S. industrial natural gas consumption hit a record 23.6 billion cubic feet per day (Bcf/d) in 2025, up about 1% from the prior record of 23.4 Bcf/d set in 2023. The EIA forecasts continued record growth through 2027, projecting industrial consumption to rise roughly 1.2% (0.3 Bcf/d) in 2026 and 1.7% (0.4 Bcf/d) in 2027. That growth is driven by rising industrial activity and will be further reinforced by increased LNG (liquified natural gas) demand and the expansion of natural gas-fueled data centers and grid capacity. The EIA's Annual Energy Outlook 2026 projects U.S. dry natural gas production will increase 20–40% by 2050 relative to 2025 across most modeled scenarios, driven by both domestic demand (power generation, industrial use) and, more significantly, international demand via LNG exports.

The demand surge is being met with a corresponding rise in production, making this a win-win for both U.S. consumers and producers. The consuming public and manufacturing base should continue to realize the benefits of abundant natural gas and relatively low energy costs, while producers benefit from expanding use cases and volumes. Both sides of the equation win in the manufacturing boom underway in the U.S.

U.S. Energy Information Administration (EIA), Short-Term Energy Outlook, July 2026
U.S. Energy Information Administration (EIA), Manufacturing Energy Consumption Survey (MECS), 2018 & 2022
U.S. Energy Information Administration (EIA), Annual Energy Outlook 2026, April 2026

CRN: 2026-0709-13599 R

The opinions and views of this commentary are those of C.J. Lawrence and are not necessarily those of Advisors Asset Management.