GLOBAL NATURAL GAS
The LNG-enie Is Out of the Bottle
Kenneth B. Medlock III CES Senior Director James A. Baker, III and Susan G. Baker Fellow in Energy and Resource Economics
From Then to Now The North American natural gas landscape has changed significantly over the last five decades, with the market and policy focus on scarcity in the 1970s, abundance in the 1990s, scarcity again in the early 2000s, and back to abundance with the onset of shale. What does the future hold? To answer this question, it is critical to first understand the structural drivers of change, so it is possible to understand the foundation upon which the North American natural gas market is built. The Natural Gas Policy Act (NGPA) of 1978 set in motion a series of changes that transformed and expanded the backbone of the North American market, resulting in it becoming the most transparent, liquid, efficient natural gas market in the world.1 This has stimulated investment in production, midstream infrastructure, and new demands. So go the fortunes of a competitive market. Since market competition was codified, the U.S. natural gas market has continued to evolve. The decade of the 1990s was characterized by abundant domestic supply, low prices, and strong demand growth, which reversed an almost two-decade trend. North American market linkages deepened through pipeline trade, especially between the U.S. and Canada. The U.S. also imported LNG from destination such as Trinidad and Tobago to serve end-of-pipe markets in New England and the Mid-Atlantic, where demands often exceeded domestic delivery capabilities in winter months. Energy Insights 2025
69