Natural gas prices are already climbing, and the trend is expected to continue through at least 2027. The U.S. Energy Information Administration projects Henry Hub spot prices will rise from $3.52 per million British thermal units (MMBtu) in 2025 to $4.31 in 2026 and $4.38 in 2027. That trajectory is driven by a combination of growing export demand, declining drilling activity, and rising consumption from power plants and industry.
Why Prices Are Rising Now
The simplest explanation: producers pulled back hard when prices were low, and now demand is catching up. The number of rigs drilling specifically for natural gas in the U.S. dropped 32% between December 2022 and December 2024. That decline hit hardest in the two biggest gas-producing regions. The Haynesville formation (spanning Louisiana and Texas) saw production fall 7%, while Appalachia’s production growth slowed to just 4% over two years.
Producers didn’t just stop drilling. Many drilled wells but left them uncompleted, essentially banking future supply underground. If prices keep rising, companies can bring those wells online relatively quickly, which could moderate price increases. But for now, the supply side is tighter than it was a year or two ago.
At the same time, overall natural gas demand is growing by more than 5% through 2026 compared to 2024 levels. Natural gas already accounts for about 38% of total U.S. energy production and has been the country’s largest domestic energy source every year since 2011. Industrial demand is projected to set new records, and power generation continues to lean heavily on gas.
LNG Exports Are Pulling More Gas Out of the Country
The biggest structural shift in the U.S. natural gas market over the past decade is the explosion of liquefied natural gas (LNG) exports. The U.S. now operates eight LNG export terminals, and capacity is expected to nearly double by 2031 compared to late 2025. New facilities are already ramping up: the Plaquemines LNG terminal in Louisiana began operations in late December 2024, an expansion at Corpus Christi shipped its first cargo in March 2025, and Golden Pass LNG is expected to start exporting in early 2026.
Each new terminal creates additional demand for domestic gas, pulling supply away from the U.S. market and sending it overseas. This tightens the domestic balance and puts upward pressure on prices. It also means U.S. prices are increasingly connected to global markets. The correlation between U.S. Henry Hub prices and Europe’s main benchmark (called TTF) has risen significantly, moving from negative territory in early 2025 to around 0.65 by early 2026. When European or Asian buyers compete for LNG cargoes, it now ripples back to American gas prices in a way it didn’t a few years ago.
A vivid example: when a winter storm caused U.S. production to drop temporarily, feedgas flows to LNG terminals plummeted by 40% during the worst days. That short disruption pushed European prices higher too, illustrating how tightly linked these markets have become.
Seasonal Patterns Still Matter
Natural gas prices follow a predictable annual rhythm. Prices typically rise heading into winter as homes and businesses crank up heating, then ease in spring. A second, smaller bump often occurs in summer when air conditioning drives up electricity demand (and the gas-fired power plants that supply it).
How cold the winter actually gets makes a significant difference. NOAA’s outlook for the 2024-2025 winter predicted warmer-than-average temperatures across the southern U.S., the eastern seaboard, and New England, with La Niña conditions pushing the storm track northward. A mild winter reduces heating demand, which can keep prices in check despite other upward pressures. A surprise cold snap, on the other hand, can cause sharp short-term spikes.
Storage Levels Offer a Cushion, for Now
One factor working against higher prices in the near term is healthy storage. As of August 2025, U.S. natural gas inventories sat 7% above the five-year average. The EIA projects working inventories will reach about 3,872 billion cubic feet by the end of October, roughly 2% above the five-year average for that time of year.
Storage acts as a buffer. When inventories are above average, there’s less urgency for buyers to bid up prices. But that cushion can erode quickly during a cold winter or if production doesn’t keep pace with growing demand. At the start of the 2025 injection season in late March, storage was actually 4% below average before strong injections rebuilt the surplus over the summer. That swing shows how fast conditions can shift.
What the Price Forecast Means for You
If you’re a homeowner watching your utility bill, the move from $3.52 to $4.31 per MMBtu represents roughly a 22% increase in the wholesale cost of gas between 2025 and 2026. Your actual bill depends on your utility’s rate structure, local distribution charges, and how much gas you use, but the direction is clear: heating and cooking with gas will cost more over the next couple of years.
The factors that could push prices higher than forecasted include a colder-than-expected winter, faster growth in LNG exports, or continued restraint from producers who keep rigs idle. The factors that could keep prices lower include mild weather, a surge in production from those banked uncompleted wells, or an economic slowdown that reduces industrial demand.
The longer-term picture is tilted toward higher prices. Export capacity is expanding on a fixed timeline, power plants are not switching away from gas anytime soon, and producers have shown they won’t ramp up drilling until prices justify it. The era of sub-$2 gas that defined parts of 2023 and 2024 is likely over.