MW The U.S. has more natural gas than it knows what to do with - helping Americans weather the Iran oil crisis
By Claudia Assis
The contrast with other energy commodities is so stark that it created negative natural-gas prices in Texas
Natural gas is flared off during an oil-drilling operation in a Permian Basin oil field in Midland, Texas.
The U.S. is awash with natural gas, even more so now as oil and gas producers have raced to take advantage of higher crude prices amid the war with Iran. There's so much natural gas - which is essentially a byproduct of oil production - that producers in Texas are struggling to get rid of it, let alone sell it.
Cheaper U.S. natural gas is a bright spot for consumers in an otherwise unforgiving energy market - one made more uncertain Wednesday as relief about a cease-fire gave way to more worries, as Iran halted Strait of Hormuz passages for oil tankers and reported attacks pierced the truce.
While oil and gasoline prices were pushed higher by the Iran war, the U.S. natural-gas market provided a stable source of energy for power generation, serving as an important element of energy security during the war.
The contrast between crude futures (CL00) (CL.1) and natural-gas futures is so stark that it has created an anomaly in the market. Natural gas coming from West Texas's Permian fields hit historically steep negative spot prices in recent weeks, as oil and gas producers in the region, eyeing those higher crude prices, are paying midstream companies to take surplus natural gas off their hands - much the way a homeowner may resort to paying a junk-removal company to get rid of unwanted items. Producers could burn off the excess gas, but that has to go through a state-permitting process.
It is not unusual for prices of natural gas from West Texas's Waha hub to fall into negative territory because of marketing infrastructure problems, but the negative pricing has never been as steep as it is now, said Tracy Cui, director of global gas research at OPIS. (OPIS is a unit of Dow Jones, the publisher of MarketWatch).
"[Producers] are just scrambling for an outlet," she told MarketWatch.
The current price range of minus $6 to minus $8 per million British thermal units is the lowest range on record, Cui said. Markets have seen occasional one-day dips to about minus $4 to minus $5 per million BTUs over the past five years, but prices had always bounced back quickly, she said.
"We've never stayed in such a deeply negative range for this long," Cui said.
Meanwhile, futures prices for the U.S. benchmark Henry Hub natural gas in Louisiana (NG00) have fared much better than Waha hub prices, but they are far from seeing the skyrocketing prices for other global energy prices.
Henry Hub futures prices have hovered close to $3 per million BTUs, whereas benchmark futures counterparts in Asia and in Europe are trading closer to $20 per million BTUs. U.S. prices are unlikely to jump that high; most long-term predictions put Henry Hub futures around $5 per million BTUs in the next few years.
"There's no ability for the U.S. and particularly Texas Permian gas to get any of that uplift," said Al Salazar, a director at Enverus Intelligence Research.
North American natural gas is stranded, dealing with surpluses and maxed-out export capacity. A similar dynamic plays in the province of Alberta, Canada, where he lives, Salazar said.
Crude-oil futures in the U.S. and in Europe have sailed past $100 a barrel, and traded close to $120 a barrel a few weeks ago, as the conflict dragged on. Prices were sharply lower on Wednesday on hopes about the cease-fire announced late Tuesday, but remained well above preconflict levels.
For the first time since 2022, Americans are paying on average more than $4 a gallon for gasoline. Businesses from fertilizer makers to airlines and shipping are also paying more for their fuels and raw materials, and some are starting to pass those higher costs to consumers, either by raising fees or applying fuel surcharges.
Read more: Here's the real reason these 3 airlines are raising their bag fees
U.S. natural gas is mostly used to heat homes and businesses and as fuel for power plants, and some of it is liquefied and exported as liquefied natural gas, or LNG.
Whether cheaper prices for the commodity may translate into cheaper electricity bills in the future remains to be seen, as other market dynamics may hold more sway. Power demand is on the rise from artificial intelligence, as U.S. utilities wrestle with infrastructure upkeep and needed upgrades. On the other hand, higher inflation fueled by the rising energy prices could lead to lower economic activity and therefore weaker demand for power.
The U.S. became an oil-and-gas juggernaut in the mid-2010s, as technological advances in hydraulic fracturing, or fracking, and horizontal drilling techniques unlocked previously out-of-reach reservoirs across the country.
The U.S. also has become a net exporter of LNG - natural gas cooled to a liquid state for ease of storage and transportation. The U.S. has exported LNG in earnest for a decade; the first LNG cargo leaving a Louisiana terminal sailed in February 2016. Efforts in previous decades were stymied by the small volumes of LNG available for export.
The U.S. supplies around 60% of Europe's LNG imports, as the region cut down on its dependency on Russian natural gas since the start of the conflict in Ukraine in 2022. Qatar is the No. 2 exporter, sending its LNG to Asian countries. After Iranian attacks to Qatar's LNG infrastructure, however, Europe is potentially in competition with major Asian buyers such as South Korea and China for U.S. LNG.
Read more: The world's largest natural-gas complex is now battered. Here's who will benefit.
Countries in Asia and Europe are scrambling to curb demand. Several Asian countries have adopted four-day workweeks in order to conserve energy, and Italy recently placed restrictions on jet fuels at some of its northern airports.
As for LNG, the U.S. is limited on how much it can export. "We just don't have enough terminals to ship," keeping the U.S. market largely in isolation, Cui said. "We are basically hitting capacity limits."
New terminal capacity has come online in recent days, but that's capacity already spoken for and a result of decisions made years ago.
At the West Texas Waha hub, which is one of several main natural-gas hubs in the U.S., the main constraint is pipeline capacity and the ability to send the area's natural gas to other hubs. Storage in the area is maxed out.
More pipeline capacity is planned there, and the new gas pipelines would alleviate some of the congestion, but "they are already accounted for," Salazar said.
Producers are unlikely to shy away from getting oil from the ground as crude futures hover around $100 a barrel, even if they have to pay to get rid of the accompanying natural gas. More oil production means more natural-gas production.
Shares of midstream companies such as Energy Transfer $(ET)$ and Enterprise Products Partners $(EPD)$ have gained about 20% in the past three months.
-Claudia Assis
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(END) Dow Jones Newswires
April 08, 2026 15:22 ET (19:22 GMT)
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