Weak natural gas prices through most of 2024 challenged the industry’s profitability, but they helped to dramatically ease the pace of U.S. inflation and, by extension, nudged the Federal Reserve (Fed) to the doorstep of interest rate cuts.
Rate reductions would lower borrowing costs and could bolster the profitability of new LNG facilities now in the works along the Gulf Coast. Infrastructure expansions needed to move more oil and gas -- including the 2.5 Bcf/d Matterhorn Express Pipeline in the Permian Basin that is due online by October -- also are underway or in late-stage planning phases.
Financing expenses for such projects would decline alongside lower interest rates. Should costs fall, it could hasten completion of some projects, increasing the U.S. natural gas sector’s ability to meet mounting global demand. If more supply gets sent via pipeline to Mexico or in the form of liquefied natural gas overseas, it could ratchet up competition and support prices.
