Source: Fortune
Summary
Natural gas prices in West Texas have turned negative due to a surplus of supply, while Europe and Asia face shortages and price spikes due to the US war on Iran. The Permian Basin’s Waha gas trading hub saw prices as low as -$9.75 per million British thermal units, with expectations of reaching -$10. This is because drilling in the area yields both oil and natural gas, but there is less infrastructure to transport natural gas, creating bottlenecks and localized surpluses.
Our Reading
The numbers tell one story.
West Texas drillers are experiencing negative gas prices, but they won’t pull back production because oil is lucrative enough to offset losses from gas. Meanwhile, Europe and Asia face shortages and price spikes, with European benchmark gas futures jumping as much as 35% and Asian countries looking to ration energy. The situation is dire, with some countries turning to coal to generate electricity.
The situation can be reframed as: “The global energy market is experiencing a stark geographic divide, where some regions are drowning in supply while others are desperate for it.”
