Search

Begin New Search
Proceed to Checkout

Search Results for All:
(Showing results 1 to 2 of 2)



The Impact of Securing Alternative Energy Sources on Russian-European Natural Gas Pricing

Nathalie Hinchey

Year: 2018
Volume: Volume 39
Number: Number 2
DOI: 10.5547/01956574.39.2.nhin
View Abstract

Abstract:
This paper examines the effects of procuring alternative sources of natural gas on Russian pricing in Europe. With the increasing presence of LNG import capability in European ports, this topic is growing in importance, especially for European policy makers. Theoretical results, stemming from an asymmetric Nash Bargaining model, suggest that Russian prices decrease as dependency on Russian gas decreases. The empirical results, obtained from the estimation of a correlated random effects model, corroborate this stipulation by finding a positive relationship between Russian pricing and average dependency on Russian supplied gas. These findings explain the recent phenomenon experienced in the Baltic Region where the presence of an LNG import terminal in Lithuania has secured access to non-Russian suppliers of gas and decreased prices from Gazprom.



Incentives for Vertically Integrated Firms in the Natural Gas and Electricity Markets to Manipulate Prices

Nathalie Hinchey

Year: 2021
Volume: Volume 42
Number: Number 1
DOI: 10.5547/01956574.42.1.nhin
View Abstract

Abstract:
This paper examines the potential for vertically integrated firms that own assets in both the natural gas and electricity markets to manipulate natural gas and electricity prices through the withholding of natural gas pipeline capacity. An integrated firm theoretically could increase the price it receives in the electricity market by withholding pipeline capacity to the wholesale natural gas market, thereby reducing wholesale supply of natural gas and potentially increasing generation costs for electricity through higher natural gas prices. A key criteria in assessing whether an integrated firm's allocation of pipeline capacity between the wholesale and retail markets constitutes manipulation relates to whether the allocation is profit maximizing on a stand-alone basis, i.e., the allocation maximizes the firm's profits in the natural gas market without considering its profits in the electricity market. I develop a theoretical model that examines the incentives to allocate pipeline capacity to the wholesale natural gas market, which supplies the power generation sector, and the retail natural gas market. I find that an integrated firm may choose to allocate more pipeline capacity to the retail market than the wholesale market in order to reduce the probability of paying fines from failing to adequately meet retail demand, to increase its profits in the wholesale natural gas market, or to increase its profits in the electricity market. In order to prove a manipulation has occurred, it must be shown that the last case is true and the first two cases had little effect on the allocation decision.





Begin New Search
Proceed to Checkout

 

© 2021 International Association for Energy Economics | Privacy Policy | Return Policy