Key Drivers

1. Weak shoulder season energy consumption has helped bring 2025 natural gas and electric prices down after surging this past winter

2. Substantial year over year increase in LNG exports that will grow even more throughout  2025 and beyond likely lifting natural gas prices in Q3 and Q4 2025

3. Late spring and summer temperatures will grow power demand from AC and will likely increase power and natural gas prices

4. Technical traders helped push down natural gas prices in March and April after helping push them up in January and February.

5. The PJM capacity rate increases 833% June 1st. The majority of electricity consumers will see an impact to their bills beginning June and July

6. TC Energy dramatically raised their pipeline transportation charges that will directly affect Columbia Gas of Ohio and Duke Energy supplier billing costs for most consumers effective April 1st.

Commentary

Wholesale natural gas prices in 2026 have not declined as significantly as in 2025 due to a combination of rising demand and constrained supply. The U.S. Energy Information Administration (EIA) projects that the Henry Hub spot price will average approximately $4.60 per million British thermal units (MMBtu) in 2026, up from $4.30/MMBtu in 2025, reflecting a continued upward trend . This price increase is driven by several factors. Firstly, domestic consumption has surged, particularly from the residential and commercial sectors, due to colder-than-normal weather patterns in early 2025 . Secondly, the rapid expansion of energy-intensive AI data centers has significantly boosted electricity demand, with data centers projected to account for 13% of the U.S. power market by 2030 . Additionally, U.S. liquefied natural gas (LNG) exports are expected to grow, with new facilities like Golden Pass LNG coming online in2026, further tightening domestic supply . On the supply side, while production is increasing, it is not keeping pace with the heightened demand. The EIA anticipates that natural gas inventories will remain below the five-year average through 2026, limiting the buffer against price volatility . These combined factors contribute to sustained higher wholesale natural gas prices in2026 compared to the more significant declines observed in 2025.

Wholesale electricity prices have not fallen in parallel with wholesale natural gas prices due to several structural and demand-side pressures in the power market. While natural gas is a key driver of electricity generation costs, other factors—such as a sharp rise in electricity demand from AI data centers, electrification trends, and extreme weather events—have pushed electricity prices higher. Additionally, PJM and other grid operators are experiencing higher capacity and transmission costs, and the retirement of older coal and nuclear plants has tightened supply. Even with lower fuel input costs, these non-fuel components of electricity pricing are keeping wholesale power prices elevated, decoupling them from the downward trends in natural gas.