Regional Natural Gas Price Differences 2024
Regional Natural Gas Price Differences 2024
: A Quick Guide
Natural gas prices vary across the US in 2024. Here's what you need to know:
- Henry Hub (Louisiana) remains the benchmark, with prices around $2.43/MMBtu
- Northeast faces higher prices due to pipeline constraints
- Midwest prices are generally lower than Northeast
- West Coast sees higher prices from supply limitations
- Gulf Coast benefits from proximity to Henry Hub and LNG exports
- Rockies have abundant local gas but limited pipeline access
- Permian Basin (Waha Hub) experiences the lowest US prices, often negative
Key factors driving regional differences:
- Weather fluctuations
- Pipeline capacity
- Supply and demand dynamics
- Local production levels
Quick Comparison:
| Region | Price Trend | Key Driver |
|---|---|---|
| Henry Hub | Benchmark | National supply/demand |
| Northeast | Higher | Pipeline constraints |
| Midwest | Moderate | Weather-dependent |
| West Coast | Higher | Supply limitations |
| Gulf Coast | Variable | LNG exports, hurricanes |
| Rockies | Lower | Limited export capacity |
| Permian Basin | Lowest | Oversupply |
Understanding these regional differences is crucial for energy market professionals, investors, policymakers, and large gas consumers.
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Henry Hub
Henry Hub in Louisiana sets the pace for U.S. natural gas futures. It's the go-to benchmark that shapes gas prices nationwide.
2024 has been a rollercoaster for Henry Hub prices:
| Month | Price ($/MMBtu) |
|---|---|
| January | 3.18 |
| February | 1.72 |
| March | 1.49 |
| April | 1.60 |
| May | 2.12 |
| June | 2.53 |
| July | 2.07 |
| August | 1.98 |
Prices nosedived early in the year, bottoming out at $1.49/MMBtu in March. This points to a trend of lower gas prices compared to recent years.
What's next? The EIA thinks Henry Hub prices will hover around $2.00/MMBtu for a while. They don't see prices breaking $3.00/MMBtu for the rest of 2024.
Why the price swings? A few key factors are at play:
- The U.S. is pumping out more gas than it uses (since 2017!). More supply = lower prices.
- Weather can shake things up fast. That January price spike? Blame it on the cold.
- A growing economy usually means more gas demand, especially in factories.
- Underground gas storage helps keep prices steady, especially when it's cold out.
Want to stay ahead of the curve? Keep your eyes on:
- Winter weather forecasts
- Economic signs that might change gas demand
- U.S. gas production and storage reports
These factors can give you a heads-up on where prices might go next.
2. Northeast (Transco Zone 6)
The Northeast, especially Transco Zone 6, is the wild child of U.S. natural gas markets. Why? Two words: crazy prices.
Here's what's going on:
Weather: The Big Price Mover
When it's freezing (below 20°F), prices go through the roof. When it's scorching (above 90°F), they climb too, but not as much.
In January 2014, temperatures nosedived below 20°F. Result? Transco Zone 6-New York prices hit a mind-blowing $120+ per MMBtu.
Demand: Gas is King
The Northeast LOVES natural gas:
- Over half of homes use gas heaters
- A third of power comes from gas
That's a lot of demand, folks.
Supply: Pipeline Puzzle
Here's the kicker: there's plenty of gas nearby in Appalachia. The problem? Getting it to the Northeast. Pipeline bottlenecks = price spikes.
Price Trends: Shifting Sands
Things are changing:
- The "Pennsylvania Gas Discount" is shrinking
- New pipelines are shaking things up
Take the Atlantic Sunrise project. Since 2018, it's been pumping 1.7 Bcfd of Pennsylvania gas southward.
Future: More Volatility?
The crystal ball says:
- Transco Zone 5 prices might widen to $0.95/MMBtu
- Algonquin Citygate could hit $2.28/MMBtu next winter
Translation: Hold onto your hats, more price swings ahead.
Your Northeast Gas Playbook
Want to stay ahead? Watch these:
- Weather forecasts
- Pipeline updates
- Regional gas production
Master these, and you'll be ready to tackle the Northeast's gas pricing rollercoaster.
3. Midwest (Chicago Citygate)
Chicago Citygate's natural gas prices have been on a rollercoaster lately. Let's break it down:
Price Swings
Prices recently hit a six-week low under $1.70/MMBtu. But don't forget: in January, they skyrocketed to over $30/MMBtu during a cold snap.
Weather's Big Role
Mild weather has changed the game:
- Temps averaged 40°F (15 degrees above normal)
- Gas demand dropped to 21.5 Bcf/d
Compare that to January's peak of 42 Bcf/d - the highest in nearly 5 years!
Chicago vs. Henry Hub
Chicago's prices have been trailing the U.S. benchmark:
| When | Chicago Price | vs. Henry Hub |
|---|---|---|
| Late Jan - Early Feb | $1.99/MMBtu avg | 27 cents below |
| February 6 | $1.80/MMBtu | 29 cents below |
What's Next?
Short-term forecast:
- Mid-50s°F (Feb 7-9)
- Back to seasonal 30s (mid-Feb)
Expect more price swings.
Price Drivers
- Weather (the big one)
- Supply (currently okay)
- Regional demand (temp-dependent)
Midwest Gas Buyer Tips
- Watch the weather
- Track regional demand
- Check pipeline updates
4. West Coast (SoCal Border, PG&E Citygate)
California's natural gas market is a whole different ball game. Here's why:
Price Spikes
Prices are jumping:
| Location | Old Price | New Price | Jump |
|---|---|---|---|
| PG&E Citygate | $2.53/MMBtu | $2.98/MMBtu | 45 cents |
| SoCal Citygate | $1.93/MMBtu | $2.43/MMBtu | 50 cents |
Heat Wave Havoc
California's cooking:
- Riverside: 72°F average, 52 cooling degree days
- Sacramento: 74°F average, 63 cooling degree days
Result? Gas use for power shot up 42%, adding 0.5 Bcf/d to consumption.
Supply Squeeze
California's gas production is stuck:
- Mostly old-school vertical wells
- Monterey shale's 15 billion barrel promise? Still waiting.
- Fracking's not the golden ticket here
Price Pain
Why so expensive?
- Tough environmental rules
- Higher taxes
- Not enough refineries
California gas: $4.49/gallon. Rest of US: $3.10/gallon. Ouch.
Wild Price Swings
Remember fall 2022? Gas hit $6.50/gallon when refineries hiccupped.
"California has way fewer off-brand stations like the Costcos and Safeways, but also the Rotten Robbie's." - Severin Borenstein, UC Berkeley
Less competition = higher prices.
What's Next?
West Coast gas prices? Buckle up. They'll keep bouncing thanks to:
- Weather whiplash
- Local production limits
- Strict green rules
Want to stay ahead? Keep an eye on refineries, weather, and demand.
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5. Gulf Coast
The Gulf Coast is shaking up US natural gas prices. Here's what's happening:
Price Swings
Gulf Coast gas prices are all over the place:
| Location | Previous Price | Current Price | Change |
|---|---|---|---|
| FGT Citygate (Florida) | $2.88/MMBtu | $3.42/MMBtu | +$0.54 |
| Gulf Coast Average | $3.05/gallon | $2.95/gallon | -$0.10 |
Gas Galore
The region's pumping out more gas than ever:
- Permian region: Up 15% in 2022 (21.2 Bcf/d)
- Eagle Ford: Jumped 14% in 2022 (0.8 Bcf/d more)
- Gulf of Mexico: 42% boost (0.5 Bcf/d) in just one week
Weather Wild Cards
Mother Nature's keeping everyone on their toes:
- Hurricane Helene knocked out 17% of Gulf gas production in September 2024
- Tampa's been cooking: 84°F average, 137 cooling degree days
LNG Boom
The Gulf Coast is becoming an LNG hotspot:
- US took the LNG export crown in early 2023
- Golden Pass LNG (Texas) joining the party in 2024 (18 million tons/year)
- Venture Global's Plaquemines LNG (Louisiana) aiming for 20+ million tons/year by mid-2025
Price Push
LNG exports are changing the game:
- More exports = higher domestic gas prices
- Freeport LNG incident showed how exports sway prices:
- Shutdown = prices dropped
- Restart = prices climbed
Local Buzz
The LNG boom's stirring things up:
- Jobs: Some new gigs, but lots of out-of-state workers
- Taxes: Big breaks for some (Cameron LNG and Sabine Pass LNG dodge 99% of property taxes)
- Environment: Some folks aren't thrilled about more LNG
Bottom line: The Gulf Coast gas scene's a wild ride. Production's up, exports are booming, and the weather's always a wildcard. It's anyone's guess where prices go next.
6. Rockies (CIG, NWP)
The Rockies region, with its Colorado Interstate Gas (CIG) and Northwest Pipeline (NWP) hubs, has been on a wild ride. Here's what you need to know:
Price Swings
NWP Rockies prices hit $44.86/MMBtu in January 2023. Why? A mix of undersupply, good weather, and limited pipeline capacity from east to west.
But don't expect that again. Future winters show some risk premium, but nothing close to that spike.
East-West Split
| Region | Pricing | Advantage |
|---|---|---|
| Eastern Rockies | Midcontinent-linked | More stable |
| Western Rockies | West Coast-linked | Better winter potential |
Supply and Demand
- Production: Up from last year, down from 2021-2022
- Rockies storage: 86% above 5-year average
- West Coast storage: 43% above 5-year average
Result? Oversupply pushing prices down.
Pipeline Issues
The El Paso Natural Gas explosion in August 2021 cut flows by 600 MMcf/d until February 2023. These disruptions can cause big price swings.
Looking Ahead
1. Less volatility: Regional supply constraints have eased.
2. Cautious growth: Wood Mackenzie sees Rockies production hitting 10.5 Bcf/d by 2015.
3. Untapped potential: Bill Barrett Corp. CEO estimates 200-400 Tcf in the Rockies, much unexplored.
Producer Strategies
- Strong balance sheets: Consider summer-only hedging for downside protection with winter upside.
- Price-sensitive: Lock in returns now to capitalize on current market premium.
The Rockies gas market is complex. While $44/MMBtu spikes are likely history, opportunities (and risks) remain.
7. Permian Basin (Waha Hub)
The Waha Hub in West Texas is shaking up natural gas pricing. Its relationship with the Henry Hub benchmark tells a tale of too much gas and not enough pipes.
Price Gap Grows
Waha prices are falling behind Henry Hub:
| When | Waha vs. Henry Hub |
|---|---|
| Sept 2021 | -$0.24/MMBtu |
| Sept 2024 | -$1.43/MMBtu |
This growing gap? It's all about local market pressure in the Permian.
Gas Explosion
Permian gas output is through the roof:
- 2021 peak: 16.7 Bcf/d
- Growth: More than doubled in 5 years
Most of this gas? It's a side effect of oil drilling, pushing local prices down.
Pipeline Problems
Pipelines can't keep up:
- New projects coming: 4.2 Bcf/d more capacity by end of 2024
- But for now? Price swings are wild
In 2024, Waha spot prices went negative 47% of the time. That's 109 out of 235 days!
Market Shakeup
1. Mexico Wants More
West Texas gas to Mexico hit 1.6 Bcf/d in May 2024. Why? New pipelines:
- Grupo Carso's Samalayuca-Sásabe (472 MMcf/d)
- Fermaca's Waha-to-Guadalajara system
"Waha prices were 'brutally attractive' for Mexico." - Rosanety Barrios, Energy Expert
2. LNG Dreams
Western Mexico's planning up to four LNG export projects. Could this help Permian's gas glut?
3. Tough Choices for Producers
With prices often negative, producers are in a bind:
- Burn the gas (risky)
- Cut oil production
- Take the hit on gas prices
What's Next?
The Matterhorn pipeline (2.5 Bcf/d) might help, but will it be enough? Keep an eye on:
- New pipeline completions
- Oil drilling changes
- Mexico's gas market and LNG plans
Waha Hub's price troubles show how production, pipelines, and markets clash in the Permian Basin.
Upsides and Downsides
Let's look at the pros and cons of natural gas pricing across U.S. regions:
| Region | Upsides | Downsides |
|---|---|---|
| Henry Hub | - U.S. gas price benchmark - Active trading |
- Price swings (2008 high: $13.58/MMBtu, 2016 low: $1.49/MMBtu) |
| Northeast (Transco Zone 6) | - Marcellus shale gas access | - Higher prices from pipeline limits |
| Midwest (Chicago Citygate) | - Lower than Northeast prices | - Weather-driven demand shifts |
| West Coast (SoCal Border, PG&E Citygate) | - Growing gas demand | - Higher prices due to pipeline constraints |
| Gulf Coast | - Near Henry Hub - LNG export sites |
- Hurricane risks |
| Rockies (CIG, NWP) | - Plenty of local gas | - Limited pipelines to other areas |
| Permian Basin (Waha Hub) | - Lowest U.S. prices - Potential Mexico exports |
- Frequent negative pricing (47% of days in 2024) - Too much supply |
Henry Hub is the U.S. gas price yardstick. It's great for traders but can be a rollercoaster. In 2008, prices hit $13.58/MMBtu. By 2016, they crashed to $1.49/MMBtu.
The Northeast? It's sitting on a gold mine of Marcellus shale gas. But getting that gas where it needs to go? That's the rub. Pipeline bottlenecks often push prices up, especially when demand spikes.
Midwest prices at Chicago Citygate are easier on the wallet than in the Northeast. But watch out for those weather-driven price swings.
The West Coast is hungry for natural gas, but limited pipelines from other regions keep prices high.
Gulf Coast prices benefit from being next door to Henry Hub and LNG export facilities. But when hurricane season hits, all bets are off.
The Rockies have gas galore, but not enough pipes to share the wealth. This can lead to local price dips.
Now, the Permian Basin's Waha Hub is a whole different ballgame. It's got the lowest prices in the U.S. and Mexico's knocking on the door. But there's a catch:
"Waha prices were 'brutally attractive' for Mexico." - Rosanety Barrios, Energy Expert
In 2024, Waha spot prices went negative 47% of the time. That's 109 out of 235 days! Producers are left with tough choices: burn gas, cut oil production, or sell at a loss.
Looking ahead, new pipelines like the Matterhorn (2.5 Bcf/d capacity) might help balance regional prices. But the gas price puzzle isn't getting any simpler in 2024 and beyond.
Wrap-up
The 2024 U.S. natural gas market is a patchwork of regional price differences. Here's why:
- Infrastructure gaps
- Supply-demand shifts
- New regulations
- Weather curveballs
Key points:
1. Price Swings Calming Down
2024's market is less wild than before:
| Year | Henry Hub Front-Month Futures Volatility |
|---|---|
| 2022 | 91% |
| 2024 (Q1) | 80% |
This steadier market helps everyone plan better.
2. Prices: A Tale of Many Regions
Price changes in 2024 were all over the map:
| Region | Price Shift |
|---|---|
| Henry Hub | $2.33 to $2.62 per MMBtu |
| NYC (Transco Zone 6 NY) | $1.76 to $1.62 per MMBtu |
| Florida (FGT Citygate) | $2.88 to $3.42 per MMBtu |
| Northern California (PG&E Citygate) | $2.53 to $2.98 per MMBtu |
Smart players tailor their game plan to each region.
3. Supply and Demand Dance
California's power sector got hungry, gobbling up 42% more gas. West Coast prices jumped in response.
4. Weather: The Wild Card
Hurricane Helene briefly shut down Gulf production, showing how fast weather can shake up prices.
5. Going Global
LNG exports are changing everything. As Jeff White from CME Group puts it:
"The U.S. has a lot of supply of natural gas, but the world needs natural gas, and they're turning to the U.S."
This global thirst is reshaping our market year-round.
6. Storage: Our Safety Net
We've got a cushy 2,893 Bcf in storage (25% above average). This buffer helps keep prices in check.
For gas pros, these regional differences aren't just numbers. They're the key to smart buying, selling, and planning. Keep your eye on these trends to stay ahead in the U.S. gas game.
FAQs
Where is natural gas the cheapest?
As of May 2024, Montana takes the crown for the lowest residential natural gas rates in the US. Let's break it down:
| State | Residential Natural Gas Rate ($/1,000 cubic feet) |
|---|---|
| Montana | 8.3 |
| Idaho | 9.9 |
| South Dakota | 10.6 |
| North Dakota | 10.8 |
Montana's rate is a whopping 20% lower than Idaho's. Why so cheap? Think local production, slick distribution, and being close to the source.
But don't get too comfy - these prices can swing based on market mood swings, weather tantrums, and the ol' supply-demand dance. While folks in these states enjoy lower energy bills, others might be feeling the pinch due to limited infrastructure or being stuck in the boonies.