America's most prolific drilling region, the Permian Basin in West Texas, is grappling with a natural gas surplus. As oil prices rose earlier this year, producers extracted significant amounts of natural gas as a byproduct. However, insufficient pipeline capacity meant they often had to pay users to take the gas. At the region's Waha trading hub, prices averaged negative $2.19 per million British thermal units in the first half of the year, plummeting to a record low of negative $7.95 in late April.

While new pipeline capacity has recently eased the situation, Permian gas prices remain considerably below the national benchmark. Analysts warn this relief may be temporary, as substantial drilling is planned before further pipeline expansion later this decade. If oil prices remain high and the Strait of Hormuz faces disruptions, the Permian could again be flooded with gas, potentially hindering production as producers lack outlets for the byproduct.

"The big question is how quickly gas production grows into the new capacity," stated Rob Wilson, president of energy data firm East Daley Analytics. "Gas tends to grow faster than crude in the Permian."