A news article on production of oil and natural gas in the Permian Basin of western...

 

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A news article on production of oil and natural gas in the Permian Basin of western Texas and New Mexico noted the following two facts: i. "Shale drillers in the Permian Basin are producing vast amounts of gas as a byproduct of prospecting for oil." ii. "Gas prices in parts of the prolific region hovered near zero last month and some trades went negative, to as low as a negative 25 cents per million British thermal units...." Source: Rebecca Elliott, "In Booming Oilfield, Natural Gas Can Be Free," Wall Street Journal, December 27, 2018. . What does it mean for a price to be negative? A news article on production of oil and natural gas in the Permian Basin of western Texas and New Mexico noted the following two facts: i. "Shale drillers in the Permian Basin are producing vast amounts of gas as a byproduct of prospecting for oil." ii. "Gas prices in parts of the prolific region hovered near zero last month and some trades went negative, to as low as a negative 25 cents per million British thermal units...." Source: Rebecca Elliott, "In Booming Oilfield, Natural Gas Can Be Free," Wall Street Journal, December 27, 2018. . What does it mean for a price to be negative?

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When the price of a commodity such as natural gas goes negative it means that suppliers are essentia... View the full answer