Episode summary
The 2028 Natural Gas Crisis No One Sees Coming
Invest Like the Best
· · 1 hr · Hosts: Patrick O'Shaughnessy · Guests: Matt Smith
Summary
Matt Smith argues the U.S. is approaching a historic natural gas supply squeeze that the market has not priced in. His base case is that gas is adequately supplied in 2026 and 2027, but by the middle of 2028 the system begins drawing down storage in a way that breaks below historical precedent, with 2029 falling below all known storage evidence. He says the biggest near-term consequence is higher electricity prices, and that the biggest loser is the U.S. consumer.
Smith says the problem is not just the amount of gas in the ground, but the chain of constraints needed to get it to market: processing, gathering, and interstate pipelines. He argues that LNG exports have already gone from about 15 BCF a day of nameplate capacity to a scheduled 35 BCF a day by the end of 2030, while credible new supply additions are much smaller than advertised. In his model, AI compute adds another layer of demand, with the most credible projects alone pulling about 5 BCF a day.
He sees winners in upstream producers like Expand Energy and Range, as well as utility-scale solar and residential solar, while warning that gas-dependent power builders and consumers face the hardest trade-offs. His preferred long-term fix is large-scale nuclear, especially AP-1000 style plants, but he says the immediate answer is to recognize the scarcity early, secure physical gas supply, and stop assuming the current abundance will last.
Key takeaways
- Smith expects U.S. gas storage to begin breaking materially below historical levels in mid-2028, with 2029 below all known storage evidence.
- He says LNG exports are a major structural demand driver, rising from about 15 BCF/day of capacity today to 35 BCF/day by 2030.
- His base case assigns roughly 5 BCF/day of credible new AI-driven gas demand, with more upside if weaker assumptions prove right.
- Smith thinks Expand Energy and Range are upstream winners, while utility-scale solar and residential solar benefit from higher power prices.
- He argues the biggest loser is the U.S. consumer, who will absorb higher electricity bills unless supply and infrastructure constraints are addressed.
- He says large-scale nuclear is the only long-term solution he sees as viable, but it needs to start now to matter in 2033 or 2034.
Notable quotes
“When you get to the middle of 2028, we start to break very materially below in a historical way where gas available in storage has ever been before”
“the upside risk price of natural gas is both you know unbounded and convex”
“the biggest losers of this would be the US consumer”
“Every solution today involve more natural gas”
“I would find a way to build entirely from beginning to end two to four AP-1000 nuclear plants”
How the episode opens
Natural gas is well supplied today, 26 to 27. When you get to the middle of 2028, we start to break very materially below in a historical way where gas available in storage has ever been before. And by 2029, we drop below all known historical storage evidence.
You're going to start to see a knife fight to secure natural gas physical in 28 like we really haven't seen before. And the biggest losers of this would be the US consumer. So Matt, the last time we did this was I think during co kind of crazy that it's been 6 years.
I've always loved talking to you about energy markets. You've been working in this space for 20 years. You're about as encyclopedic on this stuff as anyone I've ever met.
But you've also been acutely studying the current energy situation in the US rebuilding sort of in a way that you'll describe from the well-level up a picture of what's happening especially as as AI is creating all this new demand through data setters etc of what is going on over the last 18 months of concerted effort. You've reached fascinating and somewhat uh scary conclusion. I'd love you to just start with a conclusion and then we're going to talk through how you came to this conclusion, who the winners might be, the losers might be, what's to be done about it.
But before we get deep into all the component parts, just tell us what you found after 18 months of study. We are headed into a place where we see an historic deficit in natural gas supply available in the United States, which which does pretend some pretty serious consequences. Natural gas which is over 40% of US power generation has become or is imminently going to become the most important fuel in the country.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- natural gas shortage
- gas storage drawdown
- lng exports
- ai power demand
- electricity prices
Watch the episode
Watch “The 2028 Natural Gas Crisis No One Sees Coming” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Invest Like the Best
Invest Like the Best, this episode and its artwork belong to Colossus | Investing & Business Podcasts. Octagon is not affiliated with the show; this page is an independent summary.
