The Russia-Ukraine conflict is driving crude oil prices to near $100/bbl. Will the crisis impact U.S. natural gas and power prices? Historically, high crude prices encourage more crude output, and with it comes associated natural gas, providing downward pressure on the fuel. Today however, many drillers are publicly stating that that they will not increase production and will pour the profits into stock buybacks and dividends, even at $150/bbl to $200/bbl. Disruptions to European gas supply may add bullish sentiment with greater interest in U.S. LNG exports. Associated gas accounted for about 15 percent of overall U.S. gas production in 2020. The Permian region of western Texas and Eastern New Mexico produces about 50% of U.S. associated gas.
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