California natural gas prices reach historic lows in early 2026

Monthly average natural gas spot prices in California reached record lows in the first five months of 2026, dropping to values last recorded in the nationwide low-price market of 2024. Record lows were recorded in Northern California's PG&E Citygate and Southern California's SoCal Border Average; SoCal Citygate prices fell to near-record lows but remained higher than some 2024 prices. Several factors contribute to California’s low prices, including above-average inventories and decreasing in-state demand for natural gas-fired electricity.

Higher-than-average storage levels in the Pacific region have contributed to California’s relatively low natural gas prices. Unlike the South Central, Midwest, and East regions, which remain near their previous five-year averages, the storage balances in the Pacific region have been more than 10% above the five-year average since the first week of December 2025. As of the week ending May 22, 2026, Pacific storage was 30.9% (69 Bcf) above the five-year average.

The share of natural gas in California’s electricity generation mix is also falling. Increased generation from solar and other renewables has reduced natural gas demand in recent years. The expansion of battery storage has also shifted some solar generation into evening hours, thereby reducing the need for natural gas-fired generation during peak evening periods. In 2025, a record low of 4.8 billion cubic feet per day (Bcf/d) of natural gas was consumed in California, down 7% (0.3 Bcf/d) compared with 2024, according to data in our Natural Gas Monthly.

California natural gas hubs have historically priced at a premium to Henry Hub, the national benchmark. The combination of above-average storage inventories in the Pacific region and reduced natural gas-fired generation has contributed to California spot prices averaging below Henry Hub in 2026 so far. The average discount in January 2026 was the widest for these hubs since data collection began for each. Although the difference to Henry Hub has narrowed, the prices in all three hubs remain below the Henry Hub price as of this writing.

Principal contributor: Andrew Iraola