Demand expected to increase liquified natural gas prices heading into 2025

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Liquified natural gas prices are forecast to increase heading into 2025 as demand is set to outpace supply, according to an analysis from the federal Energy Information Administration.

Average dry gas production wobbled down from 2023 to 2024, with companies ramping down production to try and counter record low prices over the past year, Reuters reported. While companies are expected to increase production again in 2025, demand is expected to well outpace supply and cause a spike in prices.

“The combination of growing LNG exports, increased electrical generation demand and the prospect of winter weather suggests a tighter supply-demand picture for natural gas in 2025 and beyond,” Thomas Jorden, CEO at Coterra Energy, said in a statement.

The EIA explains how rising demand for exports means domestic gas prices are predicted to rise 33% from a four-year low in 2024 to a three-year high in 2025, “mainly because of increased liquefied natural gas (LNG) exports,” Bank of America analysts said in a statement, according to Reuters. 

Louisiana produces and uses vast amounts of natural gas, and price increases could affect consumers who live in the state as well as industry interests

The United States was the world’s largest liquefied natural gas exporter in 2023, with Louisiana handling 61% of the U.S. liquified natural gas exports, according to the Energy Information Administration. Natural gas was also the primary fuel used to generate electricity in Louisiana in 2023, driving 76% of net electricity generation in the state and fueling seven of the 10 highest annual power-generating plants in Louisiana. 

New operations planned to enter the market, such as the newest phase of Venture Global’s Plaquemines facility, will likely increase supply and stabilize prices, but only after it becomes operational at the end of this year and begins consistent production after a testing phase.

Increasing industry interest in LNG export facilities along Louisiana’s coast also come with controversy centering on the safety of residents living around the facilities and environmental costs. The Biden administration paused permitting for new LNG export terminals earlier this year amid threats of climate change and domestic price increases, but the incoming Trump administration is moving to immediately lift the pause and allow new export permits into next year.