Even as natural gas pipeline operators take action to balance system capacity with an oversupply of natural gas flooding the market, prices at the SoCal Citygate have consistently held a substantial premium to values at nearby delivery locations, prompting the question, why?

Spot prices at SoCal Citygate averaged less than $1.00/MMBtu above the Henry Hub until winter 2022, when the differential exploded to average $30.00 in December and nearly $15.00 for the full winter. That’s “close to three times the previous winter’s price and the highest on record for that period,” said RBN analyst Sheetal Nasta in a recent blog.

While other California and West Coast markets saw similar price spikes – Malin hit $32.00 on Dec. 9 and PG&E Citygate surged to $44.50 – most markets...