Henry Hub: Why Australia's Energy Market Tracks This Global Gas Benchmark

For Australians watching the energy sector, the term Henry Hub crops up with increasing frequency. But what exactly is Henry Hub, and why does it matter so much—especially in 2025, when global energy dynamics are shifting at record speed?

What is Henry Hub?

Located in Erath, Louisiana, Henry Hub is a major natural gas pipeline junction in the United States. It’s not just a physical site—Henry Hub acts as the pricing point for natural gas futures on the New York Mercantile Exchange (NYMEX), effectively serving as the reference price for North American, and increasingly, global gas markets. The daily and monthly settlements at Henry Hub set the tone for gas contracts around the world.

While Australia is a major exporter of liquefied natural gas (LNG), much of our pricing, especially for spot and short-term contracts, is still influenced by fluctuations at Henry Hub. This linkage has grown tighter as global gas trade becomes more flexible and interconnected.

Why Henry Hub Matters in Australia’s 2025 Energy Landscape

• Global Price Anchor: Australian LNG exports—destined for Asia and beyond—are often indexed to Henry Hub prices. With the US now a leading LNG exporter and flexible supply routes, price movements at Henry Hub can ripple all the way to Gladstone or Darwin.

• Investment Decisions: Local gas projects and infrastructure investments increasingly reference Henry Hub as a benchmark, shaping feasibility studies and risk assessments.

• Policy and Regulation: As the Australian government debates domestic gas reservation policies and seeks to balance supply, export contracts, and energy transition goals, Henry Hub pricing helps inform policy responses.

For example, in early 2025, after a winter surge in the Northern Hemisphere, Henry Hub spot prices spiked to over USD $4.50/MMBtu—up from lows under $2/MMBtu in 2023. This triggered a re-evaluation of export pricing from Australia’s east coast LNG terminals, with some short-term contracts fetching significant premiums in Asia. Domestic manufacturers, meanwhile, faced renewed calls for government intervention to ensure affordable local supply.

2025 Trends: Volatility, Energy Transition, and Australian Implications

The past year has underscored how interconnected global gas markets have become:

• Volatility is Here to Stay: Weather events, geopolitical tensions, and shifting demand in Asia and Europe mean Henry Hub prices are more volatile than ever. Australian exporters and energy users need to monitor these swings closely.

• Energy Transition Pressures: As both the US and Australia ramp up hydrogen and renewables, the role of gas as a ‘transition fuel’ remains under debate. Yet in the short-term, LNG remains crucial, and price signals from Henry Hub continue to guide investment in gas supply and infrastructure.

• Contract Structures Evolve: Australian LNG contracts are increasingly flexible and shorter in duration, often linked to Henry Hub or hybrid indices rather than traditional oil-linked formulas. This exposes local producers and buyers to more direct US market dynamics.

Notably, the Australian Energy Regulator (AER) and the ACCC have started referencing Henry Hub in their market analysis, reflecting the benchmark’s relevance in domestic price-setting and policy discussions.

Real-World Example: East Coast Gas Market in 2025

Consider a Queensland-based manufacturer negotiating a new gas supply contract. With Henry Hub futures rallying due to cold snaps in North America and European LNG demand, local suppliers peg their offers to international benchmarks. The result: Australian businesses must factor Henry Hub price risk into their budgeting and hedging strategies—even when the gas is produced locally.

Meanwhile, investors eyeing new gas infrastructure—such as the proposed expansion of the Port Kembla LNG terminal—scrutinise Henry Hub futures as a key input into project economics and funding models.

Looking Ahead: What Should Australians Watch?

• Monitor Henry Hub Movements: Even if you’re not trading gas, Henry Hub’s price swings can impact everything from electricity bills to manufacturing costs.

• Policy Shifts: With the Federal Government reviewing LNG export controls and domestic reservation mechanisms in 2025, expect more explicit reference to Henry Hub in regulatory frameworks.

• Investment Opportunities: As Australia and the US deepen energy trade links, savvy investors are looking at gas producers, infrastructure, and even derivatives markets tied to Henry Hub price moves.