Reviewed August 2026 against EIA natural gas data, University of Illinois farmdoc/USDA fertilizer price series, and FAO fertilizer statistics.

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The short answer

Nitrogen fertilizer is not made from petroleum. It is made from natural gas — specifically from the methane in it, which is split into hydrogen in a steam methane reformer and then combined with nitrogen pulled from the air. Crude oil and its refined products barely enter the chemistry; they show up later, in the diesel that hauls the product and the plastics that bag it.

The confusion is understandable, because the economics behave exactly like an oil product: natural gas is more than 70% of the variable cost of producing ammonia, according to CF Industries’ fertilizer price explainer published 27 March 2026. The European Commission puts the same figure at around 70% of nitrogen fertiliser production costs. So a fossil fuel does set the price of your nitrogen — just not the one most people name.

What each fertilizer nutrient is actually made from

The three macronutrients have three completely different origin stories. Only one of them is a gas-chemistry product; the other two are dug out of the ground. This is the distinction that gets lost when “fertilizer” is treated as one commodity.

Where is most fertilizer made?

Two answers, because “where” means different things at global and national scale.

Globally. The US Energy Information Administration put 2021 ammonia output at 47 million metric tons in China, 19 million in Russia and 17 million in the United States — China alone roughly as much as the next two combined. Across all nutrients, the FAO’s Inorganic Fertilizers 2002–2023 release (published 11 July 2025) reports 208 million tonnes of nutrient produced in 2023, a 40% rise since 2002.

In the United States. Ammonia plants are built where cheap pipeline gas is, which means the Gulf Coast and the Midwest corn belt. The gas logic is stark: EIA reported on 7 November 2025 that the Haynesville play across Texas, Louisiana and Arkansas produced 14 Bcf/d in the first half of 2025, with the Permian at 25 Bcf/d and Appalachia at 33 Bcf/d. A single nitrogen complex can burn close to 100 million cubic feet a day, per EIA’s 29 July 2015 assessment of new methanol and fertilizer plants — you do not site that load far from a major pipeline.

Natural gas to fertilizer: the actual chain

Four steps turn a pipeline molecule into something a corn plant can use. The first two are the reason the whole industry is hostage to gas prices.

1. Steam methane reforming. Methane meets steam over a catalyst: CH₄ + H₂O → CO + 3H₂. The US Department of Energy gives the operating window as 700–1,000 °C at 3–25 bar (roughly 44–362 psi). The reaction is endothermic, so more gas is burned to supply the heat — gas is both feedstock and fuel.
2. Water-gas shift. CO + H₂O → CO₂ + H₂, squeezing out more hydrogen. The CO₂ stream that comes off here is not waste — it is the second raw material for urea.
3. Ammonia synthesis. Hydrogen plus nitrogen separated from air, over an iron catalyst under pressure, gives NH₃. This is the Haber-Bosch step.
4. Upgrading. Ammonia goes out as anhydrous ammonia (82% N) or is converted on-site into urea (46% N), ammonium nitrate, ammonium sulfate, calcium ammonium nitrate, or UAN solution.

How a gas price becomes your fertilizer bill

Because gas is more than 70% of ammonia’s variable cost, the Henry Hub benchmark is the leading indicator every nitrogen buyer should watch. It is volatile on a monthly basis, which is why timing matters more than forecasting.

EIA’s monthly Henry Hub spot series — updated weekly at eia.gov — shows $7.72/MMBtu in January 2026 collapsing to $2.77 in April 2026 and recovering to $3.62 in August 2026. For comparison, the 2024 annual average was about $2.29/MMBtu. Pull the current month from that page before you price anything; the numbers below will be stale within weeks, the method will not.

Convert any product price into cost per pound of nitrogen

This is the calculation that lets you compare anhydrous, urea and UAN on the only basis that matters — dollars per pound of actual N — and test how much of the price you are paying is gas.

What nitrogen has actually cost

Two reference points frame every purchasing decision. The peak: USDA's Economic Research Service records that anhydrous ammonia peaked above $1,600 per ton and urea passed $1,000 per ton in 2022. The long-run baseline: over September 2008 to 2020, University of Illinois farmdoc daily puts average Illinois anhydrous just under $650/ton, urea around $440 and 28% liquid nitrogen around $300.

Against that baseline, the first week of August 2025 came in at $786/ton anhydrous, $594/ton urea and $431/ton UAN 28 — up 6%, 10% and 20% respectively on the same week in 2024. The anhydrous figure works out to $0.48 per pound of nitrogen.

For the current number, USDA's Agricultural Marketing Service publishes fertilizer price reports on a rolling basis and ERS maintains the Fertilizer Use and Price series (last updated 30 December 2025, with consumption tables running from 1960). Note the limitation ERS states plainly: its price table 7 runs only through 2014 and its price indices through 2018, so for a current quote you need AMS or a dealer, not the historical series.

Integrated gas complexes and the LNG connection

An integrated gas-fertilizer complex puts reforming, ammonia synthesis, urea granulation and often nitric acid and UAN blending on one site, fed by one gas contract. The advantage is not just scale — it is that the CO₂ stripped out at the shift reactor walks a few hundred metres to the urea reactor instead of being vented. Integration is why a site's urea capacity is usually tied to its own ammonia capacity rather than bought in.

The LNG angle matters where pipeline gas does not reach. Europe now runs a large share of its industry on imported LNG, and the United States is the supplier: EIA reported on 16 April 2026 that US LNG exports hit 15.1 Bcf/d in 2025, are forecast at 17.0 Bcf/d in 2026 and 18.5 Bcf/d in 2027 under its Short-Term Energy Outlook, with a record 10.3 Bcf/d — 68% of the total — going to Europe in 2025. Globally, LNG trade reached a record 56.3 Bcf/d in 2025, the US holding 26% of exports.

That is a two-way transmission line for fertilizer risk. A European ammonia producer buying LNG-linked gas competes for the same molecules a US producer buys off Henry Hub — and loses, which is why the Commission notes US nitrogen prices sit well below global levels. The consequence for EU farmers is stark: nitrogen fertiliser prices in April 2026 were 71% above the 2024 average, prompting a Fertiliser Action Plan adopted 19 May 2026 and a €540 million emergency support package approved 17 July 2026. The EU imports about 30% of its nitrogen, 70% of its phosphates and 40% of its potassium.

Concentration risk sits on the export side too. CF Industries notes the Middle East accounts for roughly 30% of globally traded ammonia and 35% of globally traded urea. Meanwhile US import dependence has fallen sharply — EIA recorded ammonia imports at 37% of US supply in 2012 but 14% in 2021. Domestic buyers are far less exposed to a shipping disruption than they were a decade ago.

How liquid nitrogen fertilizer is made

First, a terminology trap worth clearing: "liquid nitrogen fertilizer" is not liquid nitrogen. Cryogenic N₂ at −196 °C is inert and useless to a crop. What growers mean is UAN solution or, less commonly, dissolved urea.

UAN is made by combining urea, nitric acid and ammonia — the nitric acid and ammonia react to give ammonium nitrate solution, which is then blended with urea solution. Both halves trace back to the same reformer. The finished grades run 28% to 32% N; the lower concentrations are sold into colder regions because a stronger solution will crystallise out in winter storage. A corrosion inhibitor goes in before it hits a steel tank.

On-farm, the realistic version of "making" liquid nitrogen fertilizer is dissolving urea in water, and it is limited by solubility and by the fact that urea dissolving is endothermic — the tank gets cold and the process self-limits. It gives you a low-analysis solution, not UAN, and it does not contain nitrate. For anything at field scale the ammonium nitrate half requires nitric acid production, which is not a farm operation.

Nitrogen products compared

Prices from farmdoc daily, first week of August 2025. The $/lb N column is the calculation above applied to those prices; it excludes application cost, which is where much of the anhydrous advantage is spent.

How much nitrogen US farms actually apply

Consumption sets the scale of the exposure. farmdoc daily's 29 May 2025 analysis of USDA NASS Agricultural Chemical Use data reports the United States using about 14,900 thousand metric tons of nitrogen in 2022, with corn taking roughly 78% of it. The trend application rate for corn reached 151.8 lb N per acre in 2024, up 10.8% from the 2002 surveyed average of about 137 lb.

Efficiency moved faster than the rate did. Nitrogen per bushel of corn fell from 1.06 lb in 2002 to 0.85 lb in 2024 — a 20% improvement, about 1.01% a year. That is the number to hold onto: the way to blunt a gas-price shock is fewer pounds per bushel, not fewer pounds per acre. NASS reruns the Agricultural Chemical Use survey by commodity on a rotating cycle, so check its current release for the latest surveyed rate in your state.

The two nutrients gas cannot make

Nitrogen is a chemistry problem. Phosphate and potash are geology problems — 45 Mt of P₂O₅ and 43 Mt of K₂O in FAO's 2023 production figures came out of mines, not reformers. No gas price cuts those costs, and no efficiency gain in Haber-Bosch touches them. They are found, drilled, permitted and dug.

A verification checklist that will still work next season

Every figure above has a vintage and will drift. This procedure does not:

1. Pull the gas price. EIA's Henry Hub monthly series is updated weekly. That is your leading indicator for nitrogen — more than 70% of ammonia's variable cost.
2. Get a current product quote from USDA AMS fertilizer reports or your dealer. Do not use historical ERS price tables for a purchase decision; ERS states they stop in 2014.
3. Convert to $/lb N before comparing products: price ÷ 2,000 ÷ N fraction. Anhydrous almost always wins on nutrient cost and loses some of it back on application.
4. Check your own rate against your own yield. The durable metric is lb N per bushel, not lb per acre. The national corn figure was 0.85 lb/bu in 2024.
5. Locate your supply. Use EPA FLIGHT or Envirofacts to see which ammonia plants sit within freight range of you, and whether they are on-line.
6. Watch the import channel. US ammonia imports fell from 37% of supply in 2012 to 14% in 2021 — but the Middle East still moves about 35% of traded urea, so shipping disruptions still transmit.

Frequently asked questions