2133 Economics

Natural gas prices were originally set by the federal regulatory agency having jurisdiction over natural gas. The original methodology for price setting was much like the rate of return methodology for pipeline transportation tariffs. This was a direct function of the believed costs of finding, developing and producing natural gas. As discussed previously, the low prices paid at the wellhead prevented the natural gas industry from maintaining the necessary supply and caused the dire gas shortages of the mid-1970s. After natural gas prices were decontrolled, and natural gas became a true commodity, prices are a

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