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US natural gas consumer spending increased 37% in 2021, mostly in Oklahoma and Texas

In 2021, U.S. consumer spending on natural gas totaled $192 billion, a 37 percent increase from 2020 after adjusting for inflation, according to the State Energy Data System.

The increase in spending followed the increase in US natural gas prices, particularly in the electric power sector in the southern US. Total natural gas consumption in the United States remained virtually unchanged from 2020 to 2021.

In every US state, the amount spent on natural gas increased in 2021. The increase was particularly large in some states, more than doubling in Oklahoma and Texas. Spending on natural gas increased more than 50% in five other 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 inventory depletions, which significantly increased natural gas spending. The fifth state where spending on natural gas increased more than 50% was North Dakota.

In the electricity sector, consumer natural gas prices averaged $5.15 per million British thermal units (MMBtu) in 2021, up from $2.41/MMBtu in 2020. In Oklahoma, i 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, 2021 natural gas use decreased in five of these states and remained about the same as it was in 2020 in Texas. Despite severe weather in Texas and Oklahoma in February 2021, temperatures haven’t changed much overall, leading to little change in demand for natural gas for heating. In the electricity sector, consumption decreased in 2021 due to the increase in prices. An exception to the decline in consumption was in North Dakota, where natural gas consumption increased 26% due to increased industrial sector use coupled with higher regional natural gas production.

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

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