Manya Rathore
Research expert covering India
Global natural gas energy - statistics & facts
Natural gas is the world's second largest source of electricity generation. Following coal, natural gas is responsible for more than one-fifth of all power produced. This is in spite of efforts to introduce more renewable sources to the power sector, with natural gas's share of global electricity production remaining steady over the past several years. Construction costs for natural gas power plants are often lower than for other major technologies, either due to already established infrastructure or the more straightforward nature of operations within such power stations.
A versatile fuel with volatile pricing
Gas-fired power plants now generate more electricity than at any point in history. Global gas-fired electricity output reached 6,919 terawatt-hours in 2025, more than double the 2,745 terawatt-hours recorded in 2000. Natural gas accounted for almost 22 percent of global electricity generation in 2025, a share sustained by its dispatchability: combined-cycle gas turbine plants can respond to demand fluctuations faster than coal or nuclear, making gas the default backup for variable renewable generation.
Beyond electricity, natural gas is an essential feedstock and heat source across the industrial and residential sectors. As such, global natural gas demand has seen a net increase in the past two decades, partly driven by greater electricity demand. Supply constraints are immediately reflected in changes to the natural gas price index and, in turn, affect power prices, as was the case in 2021 and 2022. Since then, prices have mostly stabilized. Several European and Asian countries have some of the highest natural gas prices for industrial customers in the world. The comparison between natural gas producers and importer countries is especially stark, with the United States, the world's largest natural gas producer, enjoying significantly lower costs.
The Strait of Hormuz shock and its ripple through gas markets
The U.S.-Israel and Iran war that erupted in late February 2026 introduced a new wave of uncertainty to global natural gas pricing. Transit trade volume through the Strait of Hormuz collapsed almost overnight, dropping from over four million metric tonnes on February 28 to roughly 52 thousand by late March 2026. Because the strait is a critical corridor for LNG shipments from Gulf producers, the disruption sent shockwaves through spot markets. LNG benchmark prices in Asia had held near roughly 10 to 11 dollars per million Btu in early 2026, but the closure of this chokepoint threatens to push prices higher as buyers compete for rerouted cargoes. In the United States, monthly natural gas prices spiked to over seven dollars per million Btu in January 2026, more than double the level seen just months earlier, before retreating. European prices, meanwhile, remained elevated at over 11 dollars per million Btu. The crisis underscores how quickly geopolitical disruptions can unwind years of market stabilization, with net energy importers in Asia and Europe bearing the heaviest cost burden.
Although Europe has tried to move away from an over-reliance on natural gas, it still accounts for a sizable portion of global gas power capacity. However, North America and Asia now hold the largest installed capacities by region, signaling where future growth in gas-fired generation is likely to concentrate.
