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Natural gas has traded at negative prices for weeks at a time in West Texas, where pipelines often lack the capacity to get the fuel to places that need it.
Daily Natural Gas Prices in West Texas
Aug. 8, 2024, 5:04 a.m. ET
Two years ago, natural-gas prices surged after Russia invaded Ukraine and restricted supplies of the fuel to many European countries, terrifying Western leaders.
Now, the fuel is so abundant that some U.S. energy producers are often paying other businesses to take it away. Natural gas has traded below zero for much of the year in West Texas, home to the country’s largest oil field, the Permian Basin.
Companies operating in the region are drilling primarily for crude oil, but natural gas typically comes out of the ground with that oil — so much of it that on some days, drillers run out of places to store the gas or the pipeline capacity to send it to the Gulf Coast or California, where there is demand for it.
The result is an upside-down local market where producers are paying buyers to take a valuable commodity.
In West Texas, natural gas closed below zero on 57 days this year through July, up from nine in all of 2023, according to S&P Global Commodity Insights. In May, prices on what’s called the spot market — where last-minute trading happens — closed as low as negative $4.60 per million British thermal units. That same day in Florida, natural gas — used to cook, heat homes and generate electricity — fetched more than $3.
“The story in the Permian is: Where’s the gas going to go?” said Mike Howard, chief executive of Howard Energy Partners, which processes and transports natural gas.
