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Today in Energy

February 14, 2023

Spending by U.S. natural gas consumers rose 37% in 2021, especially in Oklahoma and Texas

annual change in natural gas expenditures by state
Data source: U.S. Energy Information Administration, State Energy Data System

In 2021, expenditures by U.S. natural gas consumers totaled $192 billion, a 37% increase from 2020 after adjusting for inflation, according to our State Energy Data System. The increased spending followed rising U.S. natural gas prices, particularly in the electric power sector across the southern United States. Total U.S. natural gas consumption remained virtually unchanged from 2020 to 2021.

In every U.S. state, the amount spent on natural gas rose in 2021. The increase was particularly high in some states, more than doubling in Oklahoma and Texas. Natural gas spending rose by more than 50% in five additional states, four of which were in the surrounding area: New Mexico, Arkansas, Louisiana, and Arizona. In February 2021, a winter storm in Texas and Oklahoma led to natural gas price spikes and depleted inventories, which significantly increased spending on natural gas. The fifth state where natural gas spending rose by more than 50% was North Dakota.

annual U.S electric power sector price of natural gas
Data source: U.S. Energy Information Administration, Short-Term Energy Outlook

In the electric power sector, natural gas prices to consumers in 2021 averaged $5.15 per million British thermal units (MMBtu), compared with $2.41/MMBtu in 2020. In Oklahoma, natural gas prices for the electric power sector were more than five times higher in 2021 than in 2020. In Texas, Kansas, New Mexico, and Arizona, they were more than three times higher.

In contrast, natural gas consumption in 2021 declined in five of those states and remained about the same as in 2020 in Texas. Despite the severe weather in Texas and Oklahoma in February 2021, temperatures did not change much overall, leading to little change in natural gas demand for heating. In the electric power sector, consumption fell in 2021 because of higher prices. One exception to consumption declines was in North Dakota, where natural gas consumption rose by 26% because of increased industrial sector use along with more regional natural gas production.

The electric power sector is typically the third-largest sector in terms of spending, behind the residential and industrial sectors. In 2021, however, it had the largest share, accounting for 31% of total U.S. natural gas spending. According to our Short-Term Energy Outlook, the electric power sector remained the largest natural gas-consuming sector in 2022, and natural gas prices for the sector nearly tripled between 2020 and 2022.

Principal contributors: Allen McFarland, Kristen Tsai