Sometimes supply and demand go so out of synch that a producer must pay a consumer rather than the other way around. That is becoming increasingly common in West Texas, where the closing price of natural gas has been negative for 57 trading days this year until the end of July, according to the New York Times.

According to a statistic from S&P Global Commodity Insights for the daily price at the Waha Hub near the Permian Basin, that equates to 37% of trading days during that period and more than six times the number of negative days experienced in the year 2023.

Waha prices have been negative a record number of times this year, according to Reuters. Waha gas ended at -$0.845 per million British thermal units in late July, having fallen as low as -$4.595 in May.

Last year, Waha natgas prices were negative on nine trading days. There were three such days in 2022, when global prices soared following Russia's invasion of Ukraine, but none in 2021.

Even in 2020, when the COVID-19 epidemic turned global markets upside down and the price of US crude oil fell for the first time in history, Waha prices fell for only nine days, according to S&P Global Commodity Insights data.

To be sure, the benchmark price for US natural gas, set at the Henry Hub in Louisiana, has not fallen into negative territory. In Europe, natural gas prices surged to 2024 highs this week as Ukrainian military crossed into Russia and gained control of a crucial gas transit facility.

Retail consumers in the United States are not compensated for using natural gas in their homes either. However, operators of natural gas-fired power plants in West Texas, such as Xcel Energy, have been compensated to take some supply.

This is owing to specific regional conditions, particularly Waha's proximity to the Permian Basin, the core of the United States' shale boom.

This year, U.S. oil output has reached new highs, and while frackers extract massive volumes of crude, natural gas is extracted as well—more than can be supplied to places with higher demand.

Previous periods of negative prices in West Texas this year were caused by bottlenecks, resulting in an excess of supply. In April, a pipeline system segment was shut down due to a fire.

Despite the low prices, energy corporations have recently indicated that they are reducing gas production. Plans for more pipelines should also assist to alleviate the supply-demand imbalance in West Texas, making it easier to transport natural gas to export hubs around the Gulf coast.

Excessive heat this summer has increased demand for electricity, which in turn has increased demand for natural gas. However, an overhang of supplies has kept them from climbing further.