Facebook LinkedIn Twitter
Shop

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

International Natural Gas market Integration

Abstract:
We explore the relationships among the North American, European and Asian natural gas markets for evidence of convergence and integration for the January 1997 through May 2011 period. The analyses are conducted under a multivariate framework, so the dynamics among the prices can be captured without the necessity of identifying an anchor price series. We find evidence of convergence among the Japanese, Korean, Taiwanese and UK prices. The North American price displays behaviour that is distinct from this group of prices. We conclude that there is not a fully integrated international natural gas market. The integration between European (represented by NBP) and Asian geographic regions appears to be due primarily to underlying contractual mechanisms specifically linking natural gas prices to oil prices rather than the result of market supply and demand interactions. We also find that the relationship among the Asian markets has evolved with Japanese prices adjusting to changes in South Korean and Taiwanese prices.

Download Executive Summary Purchase ( $25 )

Energy Specializations: Natural Gas ; Natural Gas – Markets and Prices; Natural Gas – Policy and Regulation; Natural Gas – Imports and Exports; Energy Modeling

JEL Codes:
Q3 -
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
F18 - Trade and Environment
C54 - Quantitative Policy Modeling

Keywords: Natural gas price, market integration, convergence

DOI: 10.5547/01956574.35.4.7

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.


Published in Volume 35, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.