In economics, negative pricing can occur when demand for a product drops or supply increases to an extent that owners or suppliers are prepared to pay others to accept it, in effect setting the price to a negative number. This can happen because it costs money to transport, store, and dispose of a product even when there is little demand to buy it, or because halting production would be more expensive than selling at a negative price.[2]
Negative prices are usual for waste such as garbage and nuclear waste. For example, a nuclear power plant may "sell" radioactive waste to a processing facility for a negative price; in other words, the power plant is paying the processing facility to take the unwanted radioactive waste.[3] The phenomenon can also occur in energy prices, including electricity prices,[3][4] natural gas prices,[5] and oil prices.[6][7]
- ^ Sheppard, David; McCormick, Myles; Brower, Derek; Lockett, Hudson (20 April 2020). "US oil price below zero for first time in history". Financial Times. Retrieved 20 April 2020.
- ^ Resilience (2020-05-28). "Shutting Down Oil Wells, a Risky and Expensive Option". resilience. Retrieved 2023-04-30.
- ^ a b Sornette, Didier (21 March 2017). Why Stock Markets Crash: Critical Events in Complex Financial Systems. Princeton University Press. p. 142. ISBN 978-0-691-17595-9. Retrieved 3 April 2021.
- ^ "Power Worth Less Than Zero Spreads as Green Energy Floods the Grid". Bloomberg. 2018-08-06.
- ^ "U.S. natural gas prices turn negative in Texas Permian shale again". Reuters. 2019-05-22.
- ^ "One Corner of U.S. Oil Market Has Already Seen Negative Prices". Bloomberg. 2020-03-27.
- ^ "Hundreds of US oil companies could go bankrupt". CNN. 2020-04-29.
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