{"id":140763,"date":"2026-08-15T06:39:55","date_gmt":"2026-08-15T06:39:55","guid":{"rendered":"https:\/\/www.europesays.com\/ai\/140763\/"},"modified":"2026-08-15T06:39:55","modified_gmt":"2026-08-15T06:39:55","slug":"hyperscalers-might-regret-embracing-natural-gas-if-new-forecast-proves-correct","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ai\/140763\/","title":{"rendered":"Hyperscalers might regret embracing natural gas if new forecast proves correct"},"content":{"rendered":"

After years of snapping up wind and solar developments, hyperscalers like Amazon, Google, Meta, and Microsoft are betting that natural gas will power the data centers behind their lofty AI ambitions. But a new research report suggests they may regret their newfound affinity for the fossil fuel<\/a>.<\/p>\n

Natural gas prices could triple in some parts of the U.S. in the coming years as hyperscaler demand collides with declining supply growth and rising exports of liquefied natural gas, according to Noreva<\/a>, an energy research firm. Hyperscalers might not be prepared for future price shocks.<\/p>\n

\u201cI think everyone in the energy markets has been lulled into a sense that gas prices can\u2019t go up,\u201d Peter Gardett, CEO of Noreva, told TechCrunch. \u201cYou just need simple arithmetic to get to a much tighter gas market than you were in just a few years ago.\u201d<\/p>\n

Hyperscalers\u2019 big bets<\/p>\n

Cheap gas has pushed hyperscalers to lock up part of the market. In March, Meta said it would build a massive 7.5-gigawatt natural gas power plant in Louisiana to power its Hyperion data center<\/a>. A few days later<\/a>, Microsoft and Google each said they\u2019d build their own gigawatt-scale gas power plants, both in Texas. And not to be left out, Amazon plans to build a 7.6-gigawatt gas power plant<\/a> in Texas.<\/p>\n

For companies that historically have shied away from large capital expenditures, the data center building boom suddenly has them investing heavily in the physical world while also pushing them deeper into energy markets, which are even less familiar territory.\u00a0<\/p>\n

Gardett said at least one investor he spoke with was \u201csurprised\u201d by how much natural gas price risk hyperscalers are willing to take on. \u201cThey\u2019re doing things that are not normal for an off-taker to do,\u201d he said.<\/p>\n

Noreva expects natural gas prices to soar above $10 per million BTUs in certain hubs, or delivery points for futures contracts. Today, prices range from about $2 to $4.50<\/a> per million BTUs, with the widely traded Henry Hub in Louisiana priced at just under $3<\/a>.\u00a0<\/p>\n

Fuel represents about half the cost of electricity<\/a> from a large power plant, so a doubling or tripling of natural gas prices could make \u201cbring your own power\u201d AI data centers much more expensive to run. That could drive up token costs, or it could push hyperscalers to connect to the grid, driving electricity prices higher.<\/p>\n

For the foreseeable future, natural gas prices appear stable \u2014 futures contracts aren\u2019t anticipating big changes. \u201cIt\u2019s not an unreasonable bet,\u201d Gardett said. But he\u2019s not convinced they\u2019re right.<\/p>\n

Surging demand<\/p>\n

Natural gas prices have been stable thanks to years of relatively flat demand and the steady addition of new supplies, which has countered waning production at old wells, Gardett said. He expects that energy companies will be able to add more supplies, just not at the rate they did before. Plus, new wells are getting more expensive.<\/p>\n

\u201cThat alone wouldn\u2019t change the economics here. What\u2019s changing the number is that finally we\u2019re connecting the domestic gas market to the global gas market,\u201d he said. \u201cAnd the second is the AI demand pull.\u201d<\/p>\n

Hyperscalers have been lured to Texas and Louisiana by cheap natural gas prices. In West Texas, in particular, most wells have been focused on oil, and the natural gas that comes out is a byproduct that hasn\u2019t found much of a market. There weren\u2019t a lot of big pipelines to move it out of the region, so producers sold natural gas at a discount to anyone who could use it. That\u2019s changing, though. <\/p>\n

\u201cThey\u2019ve finally built some pipelines out there, and a lot of that is headed towards export markets,\u201d Gardett said.<\/p>\n

As West Texas becomes more connected to national and international natural gas markets, demand there will influence prices elsewhere and vice versa. Even modest price swings near hyperscalers\u2019 big data centers could be magnified elsewhere. <\/p>\n

\u201cYou will get places where you get a lot of gas next to someplace where there\u2019s none, and so you\u2019ll get those big differentials,\u201d Gardett said. It\u2019s those differentials that will drive prices in some regions above $10 per million BTUs for extended periods of time.<\/p>\n

Under that scenario, even if hyperscalers can stomach higher prices, their natural gas consumption could add a new dimension to the data center backlash. Already, 80% of consumers<\/a> are worried about data centers\u2019 impact on their utility bills, mostly related to electricity. That angst could spill over to natural gas bills.<\/p>\n

Hyperscalers, in their haste to power their AI data centers, are quickly enmeshing themselves in the fossil fuel world. It\u2019s a space in which they have relatively little experience, but one that could soon materially impact their businesses.\u00a0<\/p>\n

\u201cOn future Alphabet earning calls, you will hear them talk about the correlation between natural gas pricing and Google results, which is strange, but that\u2019s where we are,\u201d Gardett said.<\/p>\n

When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/p>\n","protected":false},"excerpt":{"rendered":"After years of snapping up wind and solar developments, hyperscalers like Amazon, Google, Meta, and Microsoft are betting…\n","protected":false},"author":2,"featured_media":140764,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,321,25,1367,132,1122,320,7546],"class_list":["post-140763","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ai","tag-ai","tag-amazon","tag-artificial-intelligence","tag-exclusive","tag-google","tag-meta","tag-microsoft","tag-natural-gas"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/140763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=140763"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/140763\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/140764"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=140763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=140763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=140763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}