In the world of oil & gas, the pendulum is swinging from oil to gas

We’re in a regime change from the past 15 years, when oil was by far the more sought-after commodity

US natural gas prices are climbing rapidly, remaining above $4 per million British thermal units (Btu).

At the same time, US oil prices continue to languish beneath $70 per barrel.

In fact, the US Energy Secretary expects oil prices to go much lower, creating a wave of bankruptcies that will ultimately leave lower cost operators than we have today.

The backdrop is that natural gas prices have room to run from here, while fears are growing that oil prices will move in the opposite direction.

My claim in this post is that we are in the early innings of a regime change, where the focus of the global oil & gas industry will pivot from oil to gas.

Particularly since the US shale revolution commenced around 2010, liquids-heavy production streams have yielded the most attractive returns for exploration and production (E&P) companies. Likewise, capital has flowed heavily toward liquids-focused basins and plays.

US gas prices have languished for much of the past 15 years.

In four of the seven months from February to August 2024, gas prices were below $2 per million Btu. In twenty-one of the twenty-two months from February 2023 to November 2024, gas prices were below $3 per million Btu. These are levels at which gas-focused E&Ps struggle to report profits.

But so far in 2025, the game has changed for both oil and gas prices.

In this post, I explain why there is greater optimism for the future of natural gas demand than there is for the future of oil demand.

Image generated by Google Gemini via the prompt “a huge stove burner with blue flames is in the foreground, and off in the distance, there is a tiny barrel of oil”

To be clear, both of these energy sources will be around for a long time to come.

But oil faces structural barriers that gas does not. And given the contours of our still unfolding energy transition, natural gas has a clearer path to growth on the road ahead.

This optimism for gas is not without its challenges, though. I detail those challenges, showing why they could ultimately spoil the future that natural gas advocates hope to see.

Yes, oil and gas markets are always choppy. We can get big moves up and down in short order. But I argue what we’re seeing now is different, and represents the start of a new order in the oil & gas sector.

Allow me to explain.