Imagine you are the owner of a natural gas company. you can either extract as much of the resource as fast as possible or delay extraction until a future time. projections indicate that consumers will use more natural gas in the future even though the resource is becoming scarce, and therefore a higher price for natural gas is anticipated for the future. what would you do in the present

Question

Business

Brogan Mills

23 November, 16:49

Imagine you are the owner of a natural gas company. you can either extract as much of the resource as fast as possible or delay extraction until a future time. projections indicate that consumers will use more natural gas in the future even though the resource is becoming scarce, and therefore a higher price for natural gas is anticipated for the future. what would you do in the present

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Gabriela Davies · Answer 1

Extract as low as possible at present and as high as much possible in the future.

Explanation:

The company must sell fewer natural gas units because the sales price is at present and this will constitute to fewer income coming by the sale of natural gas, the company must only earn from natural gas as much as required to finance its needs at present. So to earn a higher revenue proportion in future due to increase in the selling price of the product, the company must extract as much as possible in future to earn more.