WHY RISING U.S. GAS DEMAND MAY NOT HIKE PRICES IN THE '90S
M.A. Adelman Massachusetts Institute of Technology Cambridge It was widely believed after the 1986 U.S. natural gas price drop that prices had to rise steeply soon because at the low prices it did not pay to replace reserves. Lack of reserves would push the price back up. This forecast raised the value of reserves in the ground. It was a mistake. Reserves were replaced because the cost had dropped so sharply that it paid to replace them.