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Gas Supplies for the World Market

James T. Jensen

Year: 1994
Volume: Volume 15
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-NoSI-13
View Abstract

Abstract:
The ability of natural gas to compete with other energy sources is increasingly favored by environmental and technological developments. Front a worldwide perspective, the gas reserves needed to satisfy this growing market are large (relative to gas demand) and are growing more rapidly. However, gets, unlike oil, is expensive to transport and many of the world's present gas reserves are in deposits that are too small or too remote to be of commercial value at present price levels. As a result, much of the supply will prove difficult to deliver to the markets that most need it, and the price consequences of market growth will vary from market to market.



Is There an East-West Split in North American Natural Gas Markets?

Apostolos Serletis

Year: 1997
Volume: Volume18
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No1-2
View Abstract

Abstract:
This paper presents evidence concerning shared stochastic trends in North American natural gas (spot) markets, using monthly data for the period that natural gas has been traded on organized exchanges (from June, 1990 to January, 1996). In doing so, it uses the Engle and Granger (1987) approach for estimating bivariate cointegrating relationships as well as Johansen's (1988) maximum likelihood approach for estimating cointegrating relationships in multivariate vector autoregressive models. The results indicate that the east-west split does not exist.



The Future of Electricity (and Gas) Regulation in a Low-carbon Policy World

Michael G. Pollitt

Year: 2008
Volume: Volume 29
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-NoSI2-5
View Abstract

Abstract:
This paper discusses whether a new paradigm is necessary for independent economic regulation of electricity (and closely associated natural gas) systems. We begin by summarizing the nature of the traditional model of electricity reform and the place of economic regulation within it. Next we outline the drivers for changing the current model of electricity regulation, namely, the maturity of the existing model, the reality of changing circumstances, and the coming of age of climate change concern. We go on to discuss the premises on which a new model of regulation should be based. These are: remembering the successes of the current system of regulation; a new focus on processes not just outcomes; a recognition of the economics of climate change; and the appropriate management of uncertainty. We then highlight the key elements of a new model for regulation: new processes of regulation; new models of competition and the issues raised by a focus on climate change. The paper draws heavily on the experience of the UK, but has direct implications for the rest of the European Union countries and for other countries whose regulatory systems mirror them.



The Short and Long Term Impact of Europe’s Natural Gas Market on Electricity Markets until 2050

Jan Abrell and Hannes Weigt

Year: 2016
Volume: Volume 37
Number: Sustainable Infrastructure Development and Cross-Border Coordination
DOI: https://doi.org/10.5547/01956574.37.SI3.jabr
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Abstract:
The interdependence of electricity and natural gas is becoming a major energy policy and regulatory issue in all jurisdictions around the world. The increased role of gas fired plants in renewable-based electricity markets and the dependence on natural gas imports make this issue particular important for the European energy market. In this paper we provide a comprehensive combined analysis of electricity and natural gas infrastructure with an applied focus: We analyze three different scenarios of the long-term European decarbonization pathways, and analyze the interrelation between electricity and natural gas markets on investments in the long run and spatial aspects in the short run.



Measuring and Assessing the Evolution of Liquidity in Forward Natural Gas Markets: The Case of the UK National Balancing Point

Lilian M. de Menezes, Marianna Russo, and Giovanni Urga

Year: 2019
Volume: Volume 40
Number: Number 1
DOI: 10.5547/01956574.40.1.lmen
View Abstract

Abstract:
Following the development of natural gas trading hubs in Europe, forward products have become a response to the higher exposure to price risk faced by energy companies. Yet, a significant share of trade occurs over-the-counter (OTC), where inter-dealer brokers act as intermediaries and deals may be customized. Hence, there are concerns about transparency and market quality, of which liquidity is a main indicator. This study investigates liquidity in the largest one-month-ahead European forward market for natural gas in the period from May 2010 to December 2014, using asynchronous high-frequency data and time-varying measures of spread and price impact from the financial market microstructure literature. The usefulness of these measures in the seasonal and evolving National Balancing Point (NBP) is assessed. Different aspects of liquidity and transaction costs are unveiled.



A Strategic Perspective on Competition between Pipeline Gas and LNG

Robert A. Ritz

Year: 2019
Volume: Volume 40
Number: Number 5
DOI: 10.5547/01956574.40.5.rrit
View Abstract

Abstract:
Global gas markets feature two types of suppliers: piped gas and LNG exporters. Pipelines have a high degree of "asset specificity" : once built, they are physically bound to a particular route. LNG is transported by tanker, with a choice of export markets. Put simply: LNG is mobile, pipelines are not. This paper uses game-theoretic modelling to show how its commitment to serving a single market confers a strategic advantage on piped gas. By "overinvesting" in its own market, a pipeline exporter can induce LNG rivals to shift sales to their other markets. The model helps understand competition between Russian piped gas and Qatari LNG. It shows how Russia's dependence on Europe can be good news for gas buyers, why these nonetheless strongly benefit from diversifying into LNG imports, and how the Herfindahl index of imports can mismeasure "supply security" . The paper also discusses Russia's evolving gas export strategy, including gas deals with China.



The Natural Gas Announcement Day Puzzle

Marcel Prokopczuk, Chardin Wese Simen, and Robert Wichmann

Year: 2021
Volume: Volume 42
Number: Number 2
DOI: 10.5547/01956574.42.2.mpro
View Abstract

Abstract:
This paper studies natural gas futures returns on EIA storage announcement days. More than 50% of the annual return is earned on these days. We find a significant difference between announcement and non-announcement day returns, which cannot be explained by the announcement surprise or other control variables. At the intraday level, the return splits half into a pre- and post-announcement part. The pre-announcement return is entirely generated on days when storage levels exceed analysts� expectations casting doubt on explanations based on informed trading. After transaction and funding cost, a simple trading strategy yields substantial returns.



How Far is Gas from becoming a Global Commodity?

Luís Aguiar-Conraria, Gilmar Conceição, and Maria Joana Soares

Year: 2022
Volume: Volume 43
Number: Number 4
DOI: 10.5547/01956574.43.4.lagu
View Abstract

Abstract:
While we can say that there is a global market for crude oil, we cannot say the same for natural gas. There is a strand of literature that argues that, in the last decades, gas markets have become less regional and more global. We use wavelets to test this hypothesis and conclude otherwise: although the European and Japanese gas markets are significantly synchronized, they are much less than the oil markets, which we take as the benchmark. We also show that the North American gas market fluctuations are independent of the other gas markets. Finally, we show that the existing synchronization between gas markets almost vanishes once one filters out the effect of oil price variations, suggesting that it is the global oil market that connects the regional gas markets.



How are Day-ahead Prices Informative for Predicting the Next Day's Consumption of Natural Gas? Evidence from France

Arthur Thomas, Olivier Massol, Benoît Sévi

Year: 2022
Volume: Volume 43
Number: Number 5
DOI: 10.5547/01956574.43.5.atho
View Abstract

Abstract:
The purpose of this paper is to investigate, for the first time, whether the next day’s consumption of natural gas can be accurately forecast using a simple model that solely incorporates the information contained in day-ahead market data. Hence, unlike standard models that use a number of meteorological variables, we only consider two predictors: the price of natural gas and the spark ratio measuring the relative price of electricity to gas. We develop a suitable modeling approach that captures the essential features of daily gas consumption and, in particular, the nonlinearities resulting from power dispatching and apply it to the case of France. Our results document the existence of a long-run relation between demand and spot prices and provide estimates of the marginal impacts that these price variables have on observed demand levels. We also provide evidence of the pivotal role of the spark ratio in the short run which is found to have an asymmetric and highly nonlinear impact on demand variations. Lastly, we show that our simple model is sufficient to generate predictions that are considerably more accurate than the forecasts published by infrastructure operators.



A Practitioner's Perspective on Modeling Prices and Trade in a Globalizing Natural Gas Market

Robert D. Stibolt

Year: 2009
Volume: Volume 30
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI-2
View Abstract

Abstract:
This paper advances some principles for practical application of natural gas models that were used during the EMF 23 study. These principles emphasize a decision-focused perspective, embrace uncertainty, demand consistency of model results with observable facts, are capable of navigating the complexity of systems, and distinguish insight from unattainable precision. The principles are designed to foster the assistance of better decision making by models and modelers.




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