Market Data

The Factory Gas Markup: Why Industrial Buyers Pay About $1.44/MMBtu Over Henry Hub

The spot benchmark is just the starting line. Transportation, distribution and utility fees stack on top before gas reaches the plant floor.

Industrial users almost never pay the Henry Hub spot price. With the benchmark at $3.29/MMBtu as of Jul 6, 2026, the average U.S. industrial delivered price, $4.90/Mcf per the EIA's latest reading in Apr 2026, or about $4.73/MMBtu in market units, runs roughly $1.44 over the hub. That markup, about 44% on top of the raw commodity right now, layers pipeline transportation, local distribution, and utility charges onto the molecule before it reaches a burner tip.

Two prices for the same molecule

Henry Hub, a pipeline interchange in Erath, Louisiana, is where U.S. gas futures settle, it prices the commodity at a single point on the national grid, nothing more. The EIA's industrial delivered series measures something different: the average of what manufacturers actually paid, everywhere in the country, with every service required to move, meter, and guarantee the gas included. Comparing the two requires one unit conversion (an Mcf carries about 1.037 MMBtu, so $4.90/Mcf equals roughly $4.73/MMBtu) and one mental adjustment: the two series are cousins, not twins. The hub can move daily on weather and storage news, while the delivered average, currently down about 7.7% from a year ago, follows with a lag and with about half its cost base barely moving at all.

Decomposing the markup

Between the hub and the plant fence sit four cost layers. Basis: the price difference between Henry Hub and your regional hub, positive in supply-short regions like New England and often negative near producing basins. Interstate transportation: reserved pipeline capacity from basin to city gate, billed whether fully used or not. Local distribution: the utility's regulated charge for the final miles, the largest single layer for plants on utility service. And service premiums: firm (non-interruptible) delivery, balancing, and metering. Large plants tapped directly into interstate pipelines compress the stack toward hub-plus-transport; smaller factories on full utility service pay all of it, which is why individual bills scatter widely around the national $4.90/Mcf average. The stack is also why delivered prices did not follow every historical hub collapse all the way down, most of those layers are fixed by tariff, not by the market.

Industrial delivered premium over Henry Hub spot (computed from $4.90/Mcf vs $3.29/MMBtu): $1.44/MMBtu. The delivered series has ranged from $4.41 (Sep 2025) to $8.43 (Feb 2026) in the archived history; the markup moves as the two series diverge.

The hub prices the molecule at one point in Louisiana. Your bill prices it at your burner tip, and the difference is the part you can actually negotiate.

Benchmarking your own bill against the markup

Here is the audit a plant energy buyer can run in an afternoon. Take a plant consuming 30,000 Mcf a year: at the delivered average of $4.90/Mcf, annual spend is about $147,000. The commodity alone, the same energy priced at Henry Hub's $3.29/MMBtu, would cost roughly $102,352. The difference, about $44,648 a year at today's prices, is what the plant pays for transport, distribution, and firm service. Divide your own bill the same way: if your implied markup runs far above the national figure of $1.44/MMBtu, the excess is concentrated in the negotiable layers, supplier margin, capacity elections, service class, not in the commodity, and that is where the next procurement conversation should start. The commodity price is the market's; the markup is, at least partly, yours.

Use the natural gas cost per batch calculator to convert your all-in delivered rate into the fuel cost inside each production run. Turn the delivered price into batch cost

Published 2026-07-13.