According to the company’s website news release on September 14, 2022, in EIA September Short-Term Energy Outlook (STEO), EIA expect natural gas consumption to increase by 3.6 billion cubic feet per day (Bcf/d) in the United States during 2022 to average 86.6 Bcf/d for the year, the most annual U.S. natural gas consumption on record. EIA forecast that U.S. natural gas consumption will increase in all end-use sectors this year. EIA expects the U.S. electric power sector to grow by 4% in 2022 to 32.1 Bcf/d, exceeding the 2020 record by 1%, which is the highest growth rate among all sectors.
The electric power sector uses more natural gas than any other U.S. end-use sector. When natural gas prices are relatively high, power providers have historically switched to cheaper fuels such as coal for electricity generation. Despite a large increase in natural gas prices this year, natural gas consumption in the electric power sector increased 7% in the first eight months of 2022, compared with the first eight months of 2021, averaging 33.2 Bcf/d. The natural gas price at the Henry Hub benchmark averaged $6.41 per million British thermal units (MMBtu) in the first eight months of 2022, compared with $3.43/MMBtu in 2021 and $1.86/MMBtu in 2020.
Coal-fired power plants have been limited in their ability to increase power generation in 2022, likely due to historically low on-site inventories of coal, constraints in fuel delivery to coal plants, and continued coal capacity retirements. Natural gas was crucial in meeting electricity demand peaks during record-high temperatures in summer 2022. The company expects natural gas consumption in the electric power sector to decrease during the fourth quarter of 2022 and during 2023, when EIA expects more renewable electricity generation capacity to come online.
EIA forecast that natural gas consumption will increase in the residential, commercial, and industrial sectors. Cold temperatures this past January increased demand for space heating in buildings, particularly in the residential and commercial sectors. Compared with their five-year (2017–21) January averages, both residential and commercial natural gas consumption were 8% higher this January. EIA forecast that natural gas consumption will increase this year in the residential sector by 0.9 Bcf/d, in the commercial sector by 0.7 Bcf/d, and in the industrial sector by 0.4 Bcf/d from 2021.
