Continued growth in U.S. natural gas demand in 2024 poses a strategic dilemma for the U.S. administration. Although the Biden administration has launched numerous initiatives to promote renewable energy, electricity generation from natural gas continues to grow. Over the first nine months of the year, American electricity producers recorded a peak production of 55.6 million MWh, an increase of almost 5% compared to 2023.
This phenomenon can be explained by the importance of natural gas in the American energy network. The PJM (Pennsylvania, New Jersey, Midwest) and ISO Midcontinent grids, covering much of Arkansas and northern states, as well as the ERCOT grid in Texas, are the largest contributors to this increase, each accounting for more than 10% of national production. On the other hand, the SERC network, covering the Carolinas and Georgia, reduced its gas consumption by 2.5%, compensating with an increase in coal production.
A contrasting dynamic
This dynamic illustrates a marked contrast between climate ambitions and the operational reality of the United States. Despite international pressure and energy transition commitments, natural gas production remains growing. At the same time, gas companies continue to benefit from favorable conditions thanks to growing demand in Asia and Europe, exacerbated by the European energy crisis linked to the invasion of Ukraine.
Internationally, Mexico, Qatar and Thailand show similar growth, but in terms of absolute volume, the United States’ share remains largely predominant. The global natural gas market could thus become increasingly dominated by American politics, influencing global prices and accentuating tensions with supporters of the energy transition.
Strategic outlook
The American context remains marked by a contradiction between decarbonization ambitions and the reality of its energy production. The International Energy Agency (IEA) estimates that the United States produces around 30% of the world’s electricity from gas, placing the country well above 2023 levels. This paradox is even more glaring in the context of the goals of the Biden administration, which seeks to drastically reduce greenhouse gas emissions while ensuring national energy security.
For companies in the sector, this situation translates into a strategic opportunity. Giant ExxonMobil recently announced an expansion of its production capacity in the Permian Basin, estimating that demand will remain strong until 2030. At the same time, gas transportation companies like Kinder Morgan, with its pipelines spanning more than 80,000 km, anticipate growth in transit capacity to Asian markets.
Impact on international markets
Continued growth in U.S. natural gas production could reshape the global price structure and intensify geopolitical tensions, particularly with Russia and Qatar, two other major players in the sector. Furthermore, this dynamic could put pressure on American climate policies, faced with the need to guarantee energy stability.
In this context, the short-term outlook seems to point towards an increase in American dependence on natural gas. The only path to reducing this dependence lies in a major acceleration of investments in renewable energy and large-scale storage, as well as the modernization of national energy infrastructure.
