As the new administration takes office, energy policy is set for a significant shift, prioritizing increased natural gas production, expanded liquefied natural gas (LNG) exports, and strategic investments in artificial intelligence (AI) infrastructure. While numerous policy changes have been introduced, their impact on energy prices remains uncertain. Let’s examine the facts and assess the potential outcomes.
Boosting Natural Gas Production
One of the new administration’s core energy strategies is revitalizing domestic natural gas production. With the U.S. already the world’s largest natural gas producer, policies aimed at streamlining permitting, easing regulations, and expanding drilling operations in key shale regions are expected to drive growth. The new administration is expected to reduce restrictions on hydraulic fracturing and pipeline expansion, making it easier for producers to extract and transport natural gas. The U.S. Energy Information Administration (EIA) forecasts that dry natural gas production will increase from an average of 104 billion cubic feet per day (Bcf/d) in 2024 to 105 Bcf/d in 2025, reaching 107 Bcf/d by 2026. While increased supply might initially put downward pressure on prices, natural gas producers will ultimately base production decisions on profitability rather than policy directives. If market conditions do not support sustainable returns, production could stagnate, limiting any price relief for consumers.
Increasing LNG Exports
With an eye on expanding U.S. influence in the global energy market, the new administration is prioritizing LNG exports. Recent approvals of large-scale terminals, like Commonwealth LNG in Louisiana, will significantly boost capacity. As of 2024, U.S. LNG exports average 12 Bcf/d, with capacity at 14 Bcf/d. Projections show exports rising to 14 Bcf/d in 2025, 16 Bcf/d in 2026, and 21 Bcf/d by 2027 as new terminals come online. By 2030, capacity is expected to exceed 20 Bcf/d, driven by projects like Rio Grande, Driftwood, and Alaska LNG, strengthening U.S. global energy dominance. In the figure, the colored areas represent all the export terminals that will come online to support this increase in export capacity. However, this expansion in LNG exports is expected to outpace the growth in domestic natural gas production, potentially tightening supplies and driving up prices for U.S. consumers and industries reliant on affordable energy. In 2025, natural gas production is projected to increase by approximately 1.2 billion cubic feet per day (Bcf/d), rising from 103.3 Bcf/d in 2024 to 104.5 Bcf/d. Meanwhile, LNG exports are set to grow by about 2.0 Bcf/d, jumping from 12.1 Bcf/d in 2024 to 14.1 Bcf/d in 2025. This widening gap between production and exports could exert upward pressure on domestic natural gas prices. Increased competition between exports and domestic demand could create price volatility, particularly during peak winter and summer seasons when energy needs are highest.
Chart Source: Constellation
Investing in AI Infrastructure for Energy Efficiency
As AI expands, demand for energy-intensive infrastructure is surging. AI-driven data centers are projected to increase power demand by 160% by 2030, with their share of global energy consumption rising from 1-2% to 3-4%. In the U.S., AI data centers currently use 4% of total electricity, potentially reaching 9-12% by 2030, further straining the power grid.
According to McKinsey & Company, U.S. data center power demand will quadruple to 606 TWh by 2030, up from 147 TWh in 2023. Goldman Sachs projects a 160% increase in data center energy use, driven by AI. This sharp rise in electricity demand is likely to push energy prices higher as infrastructure struggles to keep pace.
To address this, the administration launched the Stargate Project, a $100 billion private-sector initiative set to scale to $500 billion by 2029. In partnership with OpenAI, SoftBank, Oracle, and MGX, it will build ten AI data centers in Texas, creating 100,000 jobs while accelerating AI-driven economic growth—and significantly increasing energy consumption. This rapid surge in AI-driven energy demand, combined with infrastructure constraints, will likely exert significant upward pressure on electricity prices, making affordability and grid reliability key concerns in the coming years.
Despite the administration’s push for increased energy production, various factors suggest that energy prices will continue to rise rather than decrease in the long-term. The expansion of LNG exports will tie domestic prices to volatile global markets, growing AI infrastructure will strain electricity grids, and natural gas producers will not overproduce if it threatens their profitability. Consumers and businesses should prepare for a future where energy costs remain high, driven by a combination of policy shifts, market forces, and rising demand across multiple sectors.
