For 75 years, petroleum has been the leading source of energy in the United States. This dominance is now on the verge of a major change. By the close of this decade, natural gas is likely to surpass oil for the first time, becoming the nation's primary energy source, with the gap between the two having nearly closed as early as 2025. This historic shift will conclude an era that began in 1950 when oil itself overtook another fossil fuel, coal, to become the top energy source.
EQT Corporation (NYSE: EQT) CEO Toby Rice, in a recent interview, stated, "I think we're likely to cross that threshold in the next few years, and by 2030, natural gas will be leading oil by a fairly significant margin." The United States is transitioning from an oil-powered nation to one that runs predominantly on natural gas. This change underscores how the economics of cheap natural gas have reshaped parts of the energy sector and squeezed out competing energy sources.
According to a recent report from the U.S. Energy Information Administration (EIA), natural gas accounted for 36% of total U.S. energy consumption in 2025, just slightly behind oil's 37%. Over the past decade, the gap between oil and gas has steadily narrowed as the shale revolution dramatically boosted natural gas production. Concurrently, the U.S. economy has progressed in electrification, while gasoline consumption—the largest source of domestic oil demand—has stagnated.
The pivotal moment where natural gas is poised to overtake oil coincides with a surge in demand for gas-fired electricity, driven by electric vehicle adoption and the rapid expansion of data centers, further straining the U.S. power grid. EIA data indicates that over 40% of U.S. electricity currently comes from natural gas. Meanwhile, the rise of electric vehicles is also dampening gasoline demand. Despite Americans driving more miles annually, gasoline consumption is not expected to return to its pre-pandemic peak.
Mark Brownstein, Senior Vice President for Energy Transition at the Environmental Defense Fund, noted, "The facts don't lie. The United States is in an energy transition, moving away from coal and oil toward electricity generated by natural gas and renewables." The EIA projects that between 2025 and 2027, U.S. oil demand will grow by 0.6%, while natural gas demand will increase by 3.4%, further closing the gap between the two energy sources.
The Rise of Electrification and the Renewable Era Decades Ago
Decades ago, most U.S. electricity still relied heavily on coal. However, with the advent of hydraulic fracturing and horizontal drilling technologies in the 2000s, vast reserves of previously uneconomical natural gas were unlocked, allowing it to rapidly displace coal as the primary fuel for U.S. power generation. EIA data shows that between 2011 and 2020, over 100 U.S. coal-fired power plants were retired or converted to natural gas.
Despite efforts to revive the coal industry, its long-term decline is expected to continue as cheaper onshore wind and utility-scale solar power, alongside natural gas, take on more of the electricity generation load. Ira Joseph, a senior research scholar at Columbia University's Center on Global Energy Policy, explained, "Natural gas dominates the power market because it's just so cheap," adding, "The U.S. has an incredible abundance of natural gas."
Rice pointed out that beyond displacing coal, the low cost of natural gas-fired power has further propelled the broader electrification of the U.S. economy. Simultaneously, the growing share of wind and solar in the U.S. power mix has, in turn, bolstered the role of natural gas generation. Due to the intermittent nature of renewable power, gas-fired plants, which can ramp up or down more quickly than coal or nuclear plants, serve as a crucial complement to wind and solar.
It is noteworthy that the forecast for natural gas becoming the top U.S. energy source does not account for the explosive growth in U.S. liquefied natural gas (LNG) exports. The U.S. is already the world's largest LNG exporter, and its export capacity is projected to roughly double by the end of this decade. In its annual LNG outlook, Shell plc estimates that by 2035, U.S. LNG plants will consume 23% of total U.S. natural gas production.
Of course, natural gas is not the only energy source experiencing growth. Brownstein noted that renewables, primarily wind and solar, are actually growing faster than natural gas. EIA data shows that between 2015 and 2025, U.S. wind and solar consumption grew more than threefold, while natural gas consumption increased by 23%. However, due to its larger base, the absolute increase in natural gas consumption still outpaces that of renewables.
Rice summarized the evolution: "We've gone from the era of wood and horses, to the era of coal, to the era of oil, and now we are moving into the era of electrification. And the era of electrification will be largely powered by natural gas."
Comments