A model Pd-only three-way catalyst has been subjected to simulated driving conditions of natural gas and gasoline operation in an operando reactor cell for X-ray absorption spectroscopy that included alternated, but longer than real oscillations, rich and lean periods and a high temperature surge (850–900 °C). The X-ray absorption near edge structure (XANES) spectra indicated that metallic palladium is observed in the whole temperature range investigated (up to 900 °C) and irrespective of the air/fuel ratio. In both natural gas and gasoline cycles, the XANES data show that the PdO reduced in the rich periods cannot be restored in the lean periods. With this background, activity for methane abatement in the high temperature regime is greatly affected by the oxidation state of palladium rather than by the change of air/fuel ratio. In the case of propene oxidation, while Pd also remains predominantly in the reduced state, activity is dictated by the oxygen concentration in the feedstock. Comparison between the two hydrocarbons demonstrates that the oxidation state of Pd may be responsible for observed methane emissions under realistic operating circumstances. Moreover, the experiments demonstrate that reduced Pd may be continuously present during operation in agreement with observations on real catalytic converters. Although this may be the average oxidation state of Pd, more advanced probes are certainly necessary to capture variations of oxidation state under the fast oscillatory conditions needed to imitate real operation.