Natural gas has never been more upside down as negative prices become more common in Texas

Sometimes supply and demand gets so fun that a producer has to pay a consumer instead of the other way around.

That’s increasingly the case in West Texas, where the closing price of natural gas was negative for 57 trading days this year through the end of July. New York Times pointed out this week.

That represents 37 percent of trading days in that period and more than six times the number of negative days seen in all of 2023, according to a data set from S&P Global Commodity Insights for the daily price at the Waha Hub near the Permian Basin.

In fact, Waha prices have been negative a record number of times to date, according to Reuters. At the end of July, Waha gas closed at -$0.845 per million British thermal units and fell to -$4.595 in May.

Last year, Waha natgas prices were negative for nine trading days. In 2022, when global prices rose after Russia invaded Ukraine, there were three such days, and 2021 saw none.

Even in 2020, when the COVID-19 pandemic upended global markets and U.S. crude oil prices turned negative for the first time, there were only nine days when Waha prices were negative, according to S&P Global Commodity Insights data.

Certainly, the benchmark price for US natural gas, which is set at the Henry Hub in Louisiana, has not fallen into negative territory. And in Europe, natural gas prices rose to their highest since 2024 last week after Ukrainian troops entered Russia and claimed the capture of a key gas transit hub.

U.S. retail customers also don’t get paid to burn natural gas in their homes. But operators of natural gas-fired power plants in West Texas, such as Xcel Energy, have been paid to supply.

This is due to specific regional factors, namely Waha’s proximity to the Permian Basin, which is the epicenter of the US shale boom.

U.S. oil production has surged to record highs this year, and as frackers unlock vast amounts of crude, natural gas is also coming out of the ground — more than can be delivered to other areas with higher demand.

Previous periods of negative prices in West Texas this year occurred as gridlocks created a supply glut. In April, a segment of a pipeline system was shut down following a fire.

Amid weak prices, energy companies have recently signaled that they are cutting gas production. And plans for additional pipelines should help ease the supply-demand imbalance in West Texas, making it easier to send natural gas to export hubs along the Gulf Coast.

This summer’s excessive heat also increased demand for electricity, which added to demand for natural gas. But a supply glut has kept them from rising higher.

The story continues

“Heavy heat in the U.S. West is pushing gas-fired electricity consumption to record levels again, but high storage levels are keeping a lid on prices, even in the notoriously volatile Southern California gas market,” S&P Global said Monday .

This story was originally featured on Fortune.com