The gap between oil and gas has narrowed over the past decade as the shale revolution has supercharged natural gas production. (Mark Felix/Bloomberg)
key takeaways:
- Natural gas is set to overtake petroleum as the top US energy source by 2030, with the gap nearly closing in 2025.
- Amid shale development, electrification and rising electricity demand, gas is projected to account for 36% of US energy consumption in 2025, behind petroleum at 37%.
- The EIA expects petroleum demand to grow 0.6% from 2025 to 2027 while gas demand will grow 3.4%, further narrowing the gap.
For 75 years, petroleum has been the energy source that has powered America more than any other. That’s about to change.
By the end of the decade, it is likely that natural gas will overtake oil for the first time, with the gap almost disappearing in 2025. This seismic shift will end a chapter that began in 1950, when petroleum ended the long-standing reign of another fossil fuel: coal.
“I’d say we’ll probably cross that threshold in the next few years and by 2030 we’ll have a big lead on petroleum,” Toby Rice, CEO of top U.S. gas producer EQT Corp., said in an interview.
America’s transformation from an oil-based country to one that runs primarily on gas shows how much the economics of cheap gas have reshaped parts of the energy sector and pushed out competing fuel sources.
According to a recent Energy Information Administration report, in 2025, natural gas was to account for 36% of U.S. energy consumption, slightly less than the 37% made up by petroleum. The gap between oil and gas has narrowed over the past decade as the shale revolution has supercharged natural gas production. Over the same period, the US economy became electrified and the largest source of domestic oil demand – gasoline – flattened.
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The big change comes as electric vehicle use and data center growth increases demand for electricity from gas-fired power plants, putting additional strain on the U.S. grid. According to EIA data, the grid generates more than 40% of its electricity by burning natural gas. EVs have also, in part, contributed to depressed gasoline demand, which is unlikely to return to the high levels reached before the COVID-19 pandemic, even as Americans drive more each year.
“The facts don’t lie: The United States is in the midst of an energy transition away from coal and oil, toward natural gas and electricity produced by renewables,” said Mark Brownstein, senior vice president of energy transition at the Environmental Defense Fund.
The EIA expects US petroleum demand to grow 0.6% between 2025 and 2027, while gas demand will grow 3.4% over the same period, further narrowing the gap between the major fuels.
Electrification, rise of renewable energy
In past decades, most electricity in the US would have been generated from coal. But since the advent of fracking and horizontal drilling in the 2000s revealed vast amounts of previously uneconomic gas reserves, gas has largely replaced coal as the nation’s largest power plant fuel. According to the EIA, from 2011 to 2020, more than 100 coal plants were replaced or converted by gas generators.
Even as President Donald Trump allocates hundreds of millions of U.S. taxpayer dollars to revive the coal industry, its decline is likely to continue as cheaper forms of energy such as onshore wind and gas along with utility-scale solar make up a growing share of grid power generation.
“Gas is dominant in energy because it’s so cheap,” said Ira Joseph, a senior research associate at Columbia University’s Center on Global Energy Policy. “Natural gas is abundant in this country,” he said.
According to Rice, in addition to phasing out coal, the favorable economics of gas-fired electricity has also generally accelerated the electrification of the American economy.
The rise of wind and solar as significant contributors to U.S. electricity generation has also aided the growth of gas-fired power plants, as gas facilities can ramp up and down more quickly than coal and nuclear generators when intermittent renewable energy declines.
In particular, gas’s status as the top US energy source does not account for the explosive growth of US liquefied natural gas. The US is already the world’s largest exporter of LNG, and shipments will nearly double by the end of the decade. Shell predicts U.S. feedgas for LNG plants will account for 23% of total U.S. gas production by 2035, according to its annual LNG Outlook.
Of course, natural gas isn’t the only energy source that’s on the rise. Brownstein said renewable energy, primarily wind and solar, has outpaced gas growth.
According to EIA data, from 2015 to 2025, wind and solar energy use more than tripled, while natural gas use increased 23%, even though the absolute growth of natural gas was higher.
“We’ve gone from the age of wood and horses to the age of coal to the age of petroleum and now we’re in the age of electrification,” Rice said. “And the era of electrification is going to be driven largely by natural gas.”
