The Energy Information Administration recently released its January 2026 “Short-Term Energy Outlook,” which gives its first glimpses of 2027. The EIA is predicting the strongest four-year growth in U.S. electricity demand since 2005-2007, fueled by data centers.
The EIA’s forecasted growth in electricity demand is a sign of economic strength. Data centers, advanced manufacturing, and energy production are all growing because America remains the best place to do business. For families, the good news is that American energy sources can meet this demand so long as regulatory barriers don’t get in the way. Bringing more reliable, affordable energy sources like natural gas, coal, and nuclear power online will help supply meet demand for electricity.
Electricity consumption is expected to grow by 1% in 2026 and by 3% in 2027. Growth will be concentrated in the commercial and industrial sectors, primarily in the southwest and northeast. In 2025, commercial electricity growth increased 2.4%, with the same forecasted in 2026 and 4.3% in 2027. Industrial growth increased 1.7% in 2025, and is expected to grow 1.6% in 2026 and 3.4% in 2027. Increasing oil and natural gas extraction, petroleum refining, and LNG production in the West will use more electricity in the coming years. This industrial and commercial growth translates to jobs and economic opportunity in communities across the southwest and northeast. These industries don’t just consume electricity—they employ people, attract investment, and strengthen local tax bases.
In 2025, total electric generation increased 2.5%. In the coming years, the generation is expected to grow by another 1% in 2026 and by 3% in 2027. Higher natural gas prices last year decreased gas’s share of generation and increased coal generation by 13%. In 2026 and 2027, coal-fired generation is expected to decline by 9% in 2026 and remain flat in 2027. Solar generation is expected to increase in the next two years due to more capacity coming online—no doubt in part because of projects rushing to come online before the expiration of Inflation Reduction Act subsidies.
Through 2027, the EIA expects the retail price of gasoline to average below $3 per gallon due to lower crude oil prices (around $55-$56 per barrel of Brent crude, or a 19% drop from 2025). Consumers are likely to pay nearly 20 fewer cents per gallon of gasoline from 2025, which will be good news for consumers’ wallets. The EIA also notes that the forecast “assumes existing sanctions on Venezuela remain in place through 2027,” and any increase in oil production from Venezuela would put additional downward pressure on oil prices.
The EIA’s forecast underscores what consumers intuitively understand: American energy abundance is an economic asset and a strategic advantage. Energy abundance is driving down gasoline prices for Americans, rising to meet the needs of commercial and industrial customers, such as data centers, and weaning Europe off Russian LNG.