Forecast warns natural gas prices could triple, raising AI data center costs

In short: A new forecast says natural gas prices could triple in some US regions, which could make it much more expensive for big tech companies to power AI data centers.

What's going on

Big cloud companies like Amazon, Google, Meta, and Microsoft are building and buying more power sources to run large data centers for AI. A data center is a warehouse full of computers that runs online services. These facilities use a lot of electricity, like a small city.

After years of focusing on wind and solar, some of these companies are now betting on natural gas because it has been relatively cheap. Noreva, an energy research firm, says that could backfire. Its report suggests prices could rise above $10 per million BTUs in certain trading hubs, compared with roughly $2 to $4.50 today.

Noreva points to two main pressures. First, US gas supply may keep growing, but not as fast as before, and new wells can cost more. Second, the US market is becoming more tied to global demand as exports of liquefied natural gas grow, and AI data centers add new demand at the same time.

Fuel is about half the cost of making electricity at a large gas power plant, according to the report. So if gas prices double or triple, running gas-powered data centers could get much pricier. That could raise the cost of AI services, or push companies to pull more electricity from the shared power grid.

What to watch

Watch whether these companies lock in long-term gas contracts, slow down new gas plant plans, or lean back toward wind, solar, and grid power. Also watch local energy bills, since higher demand near Texas and Louisiana data center hubs could affect prices in some areas (like many shoppers rushing the same checkout line).

Source: TechCrunch AI