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Invest Like the BestWhy Natural Gas Will Be AI’s Next Great Shortage
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At a glance
WHAT IT’S REALLY ABOUT
U.S. natural gas supply crunch looms as LNG and AI surge
- Matt Smith argues the U.S. is heading toward an historic natural-gas deliverability deficit starting in 2028, with storage levels projected to fall below any prior precedent by 2029 in his modeling.
- He says LNG exports—set in motion by long-lead permitting, financing, and contracts—are the dominant incremental demand driver this decade, while AI data-center power needs add additional gas demand on top.
- He contends the U.S. has gas resources in the ground, but processing, gathering, and especially interstate pipeline constraints prevent supply from scaling fast enough to match late-decade demand.
- He expects the main impact to be sharply higher natural-gas and electricity prices, making U.S. consumers the biggest losers and forcing painful trade-offs among domestic use, AI compute growth, and global LNG commitments.
- He outlines mitigation paths that emphasize accelerating large-scale nuclear builds for the 2030s and expanding solar (including residential solar with batteries) to reduce exposure to gas-driven power prices.
IDEAS WORTH REMEMBERING
5 ideasA severe U.S. natural-gas shortage is projected to emerge in 2028–2030.
Matt Smith says the U.S. looks adequately supplied in 2026–27, but his modeling shows storage draws turning historically extreme starting in 2028, with 2029 falling below all known historical storage evidence.
LNG export growth is the biggest structural demand driver, with AI adding new pressure.
He argues the fundamental demand ramp was set in motion by LNG exports: current exports are about 15 Bcf/day and he says the U.S. is scheduled to reach up to 35 Bcf/day by end-2030, driven by long-lead, project-financed infrastructure and contracts.
AI compute can add meaningful incremental gas demand, with large upside in extreme cases.
Smith describes a base case where “credible” AI-related gas demand is about 5 Bcf/day, while a lower-probability buildout could more than double that to roughly 12–15 Bcf/day by the early 2030s if unmitigated.
The bottleneck is infrastructure and deliverability, not simply underground resource size.
Smith emphasizes the issue is not that the U.S. is out of gas in the ground, but that deliverability is constrained by processing capacity, gathering lines, and especially the difficulty of building interstate pipelines under permitting and regulatory hurdles.
Flat forward pricing may be masking a coming supply-demand mismatch and delaying action.
He expects complacency because near-dated prices and forward curves remain flat, discouraging investment; he cites shut-ins and low visible market signals as evidence that the market is not pricing late-decade tightness.
WORDS WORTH SAVING
5 quotesWe are headed into a place where we see an historic deficit in natural gas supply available in the United States, which, which does portend some pretty serious consequences.
— Matt Smith
I think we will come to the conclusion that the upside risk, price of natural gas is both, you know, unbounded and convex.
— Matt Smith
Gas has lulled everybody to sleep.
— Matt Smith
When you get to the middle of 2028, we start to break very materially below in a historical way where gas available in storage has ever been before.
— Matt Smith
You're gonna start to see a knife fight to secure natural gas physical in '28 like we really haven't seen before, and the biggest losers of this would be the US consumer.
— Matt Smith
SPEAKERS
Matt Smith
guestEnergy-market investor and analyst focused on U.S. natural gas supply/demand and infrastructure dynamics.
Patrick O'Shaughnessy
hostHost of Invest Like The Best and interviewer covering business, investing, and industry deep-dives.
High quality AI-generated summary created from speaker-labeled transcript.
