It’s been an eventful start to 2025 in the energy sector, from January’s polar vortex sending temperatures plunging across much of the country, to headlines discussing energy’s connection to artificial intelligence, data centers, geopolitics, trade, and more.

Variables such as international affairs, technology developments, and weather events like a polar vortex or a summer heat wave—alongside many other factors—can influence energy supply, demand, and prices. That’s why it’s important to work with a trusted energy partner like UGI Energy Services to help navigate the energy sector for your specific needs.

As we look ahead to the rest of 2025, below is a snapshot of predictions for energy prices, consumption trends, market moves, and more.*

Natural Gas Market Conditions

Across all forecasts, one thing is constant: natural gas is viewed as an abundant and continued affordable fuel choice.

In 2024, the U.S. benchmark Henry Hub natural gas spot price hit the lowest average annual price in inflation-adjusted dollars ever reported. According to the U.S. Energy Information Administration (EIA), the price decreased 16% from 2023 and a staggering 68% from 2022.

In 2025, most areas of the U.S. can expect prices to remain low (around the same as in 2024). In its Winter Fuels Outlook, the EIA expects homes in the West to spend 6% less, the South 4% less, the Northeast 1% more, and the Midwest 11% more on natural gas this year. This increase in the Midwest is due to an expectation of colder weather than last year’s record-setting mild winter. As shown in the chart below, natural gas is the most affordable heating energy choice.

Looking at storage, the U.S. began 2025 with 6% more natural gas in storage than the previous five-year average. After higher demand this year, this is expected to decrease to 4% below the five-year average.

Growing natural gas use emphasizes the importance of American natural gas production, buttressed by increased renewable natural gas production, discussed below. EIA forecasts dry natural gas production to increase by 1% to 104.5 Bcf/d in 2025 and by nearly 3% to 107.2 Bcf/d in 2026.

Not only does natural gas production provide numerous environmental and economic benefits, but it also ensures affordable and stable prices while reducing reliance on foreign supply sources. And keep in mind that energy delivery infrastructure, such as the pipeline and LNG assets owned and operated by UGIES, are essential to delivering American natural gas to local communities and customers.

Electricity, Oil, and Propane Markets

Electricity

U.S. electricity prices and demand are expected to rise in 2025. EIA projects that the average U.S. residential electricity price will increase by 2% in 2025 compared to 2024, reaching 16.8 cents per kilowatt-hour (kWh). However, when accounting for inflation, residential prices are expected to remain relatively stable.

Wholesale power prices are anticipated to rise in most U.S. regions, with the EIA forecasting an average of $40 per megawatt-hour in 2025, up 7% from 2024.

Electricity demand in the United States is projected to continue growing in 2025, following a 2% increase in 2024. The EIA expects total U.S. electricity consumption to grow by 86 billion kilowatt-hours in 2025. This growth is primarily driven by increased demand from new semiconductor and battery manufacturing operations, as well as rising power consumption from data centers. The industrial sector is forecast to see the fastest growth in electricity demand, with a 2% increase expected in 2025. Commercial sector demand is also projected to rise by 2% in 2025, while residential consumption is expected to grow by 2% as well.

Oil

Oil prices are expected to decrease over the next two years due to increased production that surpasses global demand. Prices are expected to decrease by 8% in 2025 and then another 11% in 2026.

Propane

Due to lower temperatures throughout the country, propane consumption will increase in 2025, but this is partly offset by an expected 8% decrease in retail propane prices. So, homes and businesses heated primarily with propane can expect to pay about the same as in 2024.

Renewable Energy

Renewable Natural Gas (RNG)

RNG production is expected to continue to grow rapidly in 2025 and beyond – with a compound annual growth rate of 45.6% from now until 2033. Projects such as UGI Energy Services’ joint venture with Archaea Energy on the Aurum Renewables landfill gas plant (below) are helping drive increased RNG production.

Due to RNG’s environmental benefits and increased demand for clean energy sources, consumers and businesses are choosing RNG for electricity generation, vehicle fuel, and more. North America currently holds approximately 40% of the RNG market share. For additional RNG resources check out the RNG Coalition and American Biogas Council or contact our team.

Solar and Wind

Electricity generation from renewable energy sources grew in 2024. The power sector added a record 37 GW of solar power capacity last year, while wind capacity additions were about 7 GW.

EIA expects “renewable power generation will increase 12% in the United States to 1,058 billion kWh in 2025 and increase a further 8% to 1,138 billion kWh in 2026. Renewable sources were the second-largest contributor to U.S. power generation in 2024 and accounted for 945 billion kWh, up 9% from 2023.”

For further reading, see Deloitte’s “2025 Renewable Energy Industry Outlook.”

How UGIES Can Help

While the energy marketplace is dynamic and influenced by many factors, UGI Energy Services’ expertise and guidance can help you reduce volatility while providing reliable, competitively priced energy.

No matter the short-term factors affecting supply and demand, or the predictions from industry experts, you can count on us to find the best energy plan for you and your business for long-term affordability and reliability to fuel your growth.

Contact the experts at UGI Energy Services today to discuss how we can set you on the right path for 2025.

Looking for additional expert energy advice? Download our Energy Guides for Business Owners! And for regular updates on the natural gas market, bookmark the American Gas Association’s Natural Gas Market Indicators webpage.

*Note: The above information is purely forecasts, not guarantees. This information is abridged and summarized from various sources, and the accuracy and completeness of which cannot be assured.