Wholesale natural gas prices in Pennsylvania surged 71% last year, according to a new report, likely leading to higher residential utility bills.
The Independent Fiscal Office, a state agency that supplies lawmakers in Harrisburg with revenue projections and economic analysis, released its quarterly natural gas report Wednesday.
It found the average going rate for a million British thermal units of natural gas in Pennsylvania rose to $2.83 in 2025 from $1.66 a year earlier. Gas utilities buy the resource directly from wholesalers. Electric utilities are impacted through their purchasing of gas-generated power.
Higher costs coincided with a rise in supply. Drilling companies like Pittsburgh-based EQT and Canonsburg-based CNX extracted 5% more natural gas in the state last year compared to 2024. They started work on 446 new wells, up from 137, marking a 69% year-over-year increase.
The top five producing counties were, from first to fifth, Susquehanna, Bradford, Washington, Greene and Lycoming. Westmoreland County came in seventh place, propelled by a 36% ramp-up in production.
Data centers and advanced manufacturers across the world are readily absorbing that supply, putting upward pressure on prices.
“As long as demand is growing, just the basic economics suggests you’re going to see prices continue to see an uptick,” said Jim Welty, president of the Marcellus Shale Coalition in Robinson.
Percentage changes don’t tell the full story, Welty cautioned. Some of the lowest prices on record occurred in 2023 and 2024, and production was stagnant for many years.
“We need to kind of reset and remember where we’ve been,” he said.
Even so, Pennsylvanians could feel the sting of higher utility bills in the coming months, if they aren’t already.
“If the wholesale market prices go up, your bill will go up,” said Elizabeth Marx, executive director of the Pennsylvania Utility Law Project. “It won’t be the exact day the market price goes up, but it will happen.”
Ever-higher rates
Utility bills are generally split into a distribution and a supply section; rising natural gas prices would be reflected under supply.
The cost for utilities to purchase natural gas or natural-gas generated electricity fell in the late 2000s because of the fracking boom, according to Marx.
Lower prices persisted mostly uninterrupted. The 2022 Russian invasion of Ukraine, which disrupted global energy markets, did briefly send Pennsylvania prices past $5 per million British thermal units, though.
All the while, distribution charges have crept up to fund grid investments. Today, customers find themselves paying ever-higher rates for distribution and supply, Marx said.
Welty argued distribution costs remain the primary driver of electricity prices.
State law requires utilities to buy the lowest-priced reliable supply of their respective commodities. They must also pass those costs onto customers without taking any profit.
As Lee Gierczynski, a spokesman for Columbia Gas, put it: “Whatever we pay for that gas is what customers pay for that gas.”
Electricity purchases are contracted a year or more in advance, noted Matthew Neistein, a spokesman for Duquesne Light, “so short-term fluctuations in gas prices typically do not have a significant impact on the default price our customers pay.”
Pennsylvania sensitivity
Another report published this month by the Independent Fiscal Office, this time looking at electricity prices, said Pennsylvania is more sensitive to natural gas costs than other states because of a high reliance on the fuel for power generation.
Natural gas accounts for roughly 60% of electricity generation in Pennsylvania, compared to 40% in other states served by the PJM Interconnection grid.
Investments in pipelines could tamp down wholesale prices, according to Welty. Pennsylvania’s regulatory structure makes it challenging to build that infrastructure in a timely way, he said.
But improvements on that front wouldn’t necessarily leave Pennsylvania households with a glut of cheap energy. Much of the current supply is converted into liquefied natural gas and exported.
“If somebody overseas is going to pay a higher price and they can ship it out, they’re going to,” Marx said.