Steady manufacturing growth and chemical sector demand push U.S. industrial natural gas consumption to new highs - Fertilizer pricing will be impacted.
U.S. industrial natural gas consumption is projected to climb to record-breaking levels through 2027, according to the latest Short-Term Energy Outlook. The forecast reflects steady growth in manufacturing activity, led by strong demand from energy-intensive industries such as chemicals and fertilizer production.
Industrial consumption averaged 23.6 billion cubic feet per day (Bcf/d) in 2025, surpassing the previous record of 23.4 Bcf/d set in 2023. This upward trend is expected to continue, albeit gradually, over the next two years.
Moderate Growth Expected Despite Efficiency Gains
Forecasts indicate industrial natural gas consumption will increase by 1.2 percent, or approximately 0.3 Bcf/d, in 2026, followed by a 1.7 percent rise, or 0.4 Bcf/d, in 2027. While these gains represent continued expansion, growth remains moderate due to ongoing efficiency improvements across industrial operations.
Advanced technologies such as improved process heaters and heat-recovery systems are reducing the amount of natural gas required per unit of output. These efficiency gains are helping offset rising demand driven by increased industrial production.
However, rising manufacturing activity is expected to outweigh these efficiency improvements. The natural gas-weighted manufacturing index is forecast to increase by 1.5 percent in 2026 and by 0.7 percent in 2027, supporting higher overall consumption.
Chemical Sector Drives Demand Growth
A significant portion of industrial natural gas demand originates from the chemical subsector, which remains the largest consumer within the industrial space.
Natural gas plays a critical role in this sector, serving multiple purposes including generating heat, producing electricity, and acting as a feedstock in key processes.
Natural gas is essential in the production of methanol, hydrogen, and ammonia, the latter being a key component of nitrogen fertilizers. Continued demand for agricultural inputs and industrial chemicals is expected to sustain consumption levels.
Other manufacturing industries also contribute to demand, although at smaller scales compared to the chemical sector.
Seasonal Patterns Persist
Industrial natural gas consumption follows a consistent seasonal pattern, with higher demand typically seen during the winter months when heating needs increase.
Consumption averaged 26.1 Bcf/d in January 2026 and is forecast to rise further to 26.7 Bcf/d in January 2027. In contrast, demand drops during the summer months, reaching seasonal lows of approximately 22.6 Bcf/d in June of both 2026 and 2027.
These seasonal fluctuations reflect operational heating needs across industrial facilities, particularly in colder regions.
Long-Term Trends Show Stabilization
Since 2018, industrial natural gas consumption has remained relatively stable, except for disruptions caused by the COVID-19 pandemic. The sharp decline in 2020 was followed by a recovery in 2021 and 2022.
Earlier growth in natural gas use was driven by low prices, which encouraged expansion in energy-intensive industries such as petrochemicals, refining, and ammonia production, particularly in the U.S. Gulf Coast region.
While the industrial sector now operates at a higher baseline consumption level, the pace of new capacity additions has slowed in recent years. As a result, future growth is expected to remain gradual rather than rapid.
What This Means for Farmers
For farmers, rising industrial natural gas demand has important implications, particularly for fertilizer costs. Natural gas is a primary input in ammonia production, which is used to manufacture nitrogen fertilizers. Higher demand from industrial users could place upward pressure on natural gas prices, especially during peak winter months.
This could translate into increased input costs for crop producers, particularly those reliant on nitrogen-heavy fertilizers. At the same time, stable and predictable growth in demand may help avoid extreme price volatility.
Farmers should closely monitor energy markets and input pricing trends when planning for upcoming planting seasons, as shifts in natural gas demand can directly impact fertilizer availability and affordability.