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(Showing results 1 to 9 of 9)



Expectations and the Evolving World Gas Market

Dagobert L. Brito and Peter R. Hartley

Year: 2007
Volume: Volume 28
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No1-1
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Abstract:
A number of authors have noted that recent changes in the liquefied natural gas (LNG) industry are likely to favor shorter term multilateral trades of LNG relative to long term bilateral and project-specific contracts. We present a model in which expectations of such a change in market structure alter investment behavior in a way that reinforces the original tendency. The result is that the structure of the natural gas market could change quite quickly, as happened previously in the world oil market.



The Relationship of Natural Gas to Oil Prices

Peter R. Hartley, Kenneth B Medlock III and Jennifer E. Rosthal

Year: 2008
Volume: Volume 29
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No3-3
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Abstract:
We investigate the relationship between the prices of natural gas and crude oil, and the factors that cause short run departures from the long run equilibrium price relationship. We find evidence that the link between natural gas and crude oil prices is indirect, acting through competition at the margin between natural gas and residual fuel oil. We also find that technology is critical to the long run relationship between fuel prices, and short run departures from long run equilibrium are influenced by product inventories, weather, other seasonal factors and supply shocks such as hurricanes.



Changes in the Operational Efficiency of National Oil Companies

Peter R. Hartley and Kenneth B. Medlock III

Year: 2013
Volume: Volume 34
Number: Number 2
DOI: 10.5547/01956574.34.2.2
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Abstract:
Using data on 61 oil companies from 2001-09, we examine the evolution of revenue efficiency of National Oil Companies (NOCs) and shareholder-owned oil companies (SOCs). We find that NOCs generally are less efficient than SOCs, but their efficiency increased faster over the last decade. We also find evidence that partial privatizations increase operational efficiency, and (weaker) evidence that mergers and acquisitions during the decade tended to increase the efficiency of the merging firms. Finally, we find evidence that much of the inefficiency of NOCs is consistent with the hypothesis that government ownership leads to different firm objectives.



The Relationship between Crude Oil and Natural Gas Prices: The Role of the Exchange Rate

Peter R. Hartley and Kenneth B. Medlock III

Year: 2014
Volume: Volume 35
Number: Number 2
DOI: 10.5547/01956574.35.2.2
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Abstract:
Several previous studies have found evidence that oil and natural gas prices in the United States are cointegrated. There is also evidence, however, that the relationship is unstable. One explanation is that technological changes alter the substitutability between natural gas and oil products. We reaffirm this finding, but also find evidence that the exchange rate influences the relative price of oil to natural gas in the United States. As in previous studies, we again find that short run departures from long run equilibrium are influenced by weather, product inventories, other seasonal factors and supply shocks such as severe tropical storms in the Gulf of Mexico. Keywords: Oil/natural gas relative price, Cointegration, Exchange rate, Nontraded and traded goods



The Future of Long-term LNG Contracts

Peter R. Hartley

Year: 2015
Volume: Volume 36
Number: Number 3
DOI: 10.5547/01956574.36.3.phar
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Abstract:
Long-term contracts have long dominated the international market for LNG. Since 2000, however, the proportion of LNG-traded spot or under short-term contracts has grown substantially, while long-term contracts have become more flexible. While long-term contracts increase the debt capacity of large, long-lived, capital investments by reducing cash flow variability, they also may limit the ability of the contracting parties to take advantage of profitable ephemeral trading opportunities. After developing a model that illustrates these trade-offs, we argue that increased LNG market liquidity resulting from a number of exogenous changes is likely to encourage much greater volume and destination flexibility in contracts and increased reliance on short-term and spot market trades. These changes would, in turn, reinforce the initial increase in market liquidity.



The Valley of Death for New Energy Technologies

Peter R. Hartley and Kenneth B. Medlock III

Year: 2017
Volume: Volume 38
Number: Number 3
DOI: 10.5547/01956574.38.3.phar
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Abstract:
It is often claimed that a difficulty of raising investment funds prevents promising new energy technologies from attaining commercial viability. We examine this issue using a dynamic intertemporal model of the displacement of fossil fuel energy technologies by non-fossil alternatives. Our model highlights the fact that since capital used to produce energy services from fossil fuels is a sunk cost, it will continue to be used so long as the price of energy covers merely short-run operating costs. Until fossil fuels are abandoned, the price of energy is insufficient to cover even the operating costs of renewable energy production, let alone provide a competitive return on the capital employed. The full long-run costs of renewable energy production are not covered until some time after fossil fuels are abandoned.



Asian Spot Prices for LNG and other Energy Commodities

Abdullahi Alim, Peter R. Hartley, and Yihui Lan

Year: 2018
Volume: Volume 39
Number: Number 1
DOI: 10.5547/01956574.39.1.aali
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Abstract:
We investigate the relationship between the Japan-Korea Marker (JKM) price of LNG, which has become more important as spot trading of LNG has increased, and spot prices of Brent oil, fuel oil and thermal coal in Asia. We find that the JKM price appears to reflect inter-fuel competition in Asia. In this respect, it could be better than oil or other spot natural gas prices as a reference price for indexing long-term LNG contracts in Asia. The JKM may also be suitable for underpinning the development of an LNG pricing hub in Asia with associated derivatives markets.



The Cost of Displacing Fossil Fuels: Some Evidence from Texas

Peter R. Hartley

Year: 2018
Volume: Volume 39
Number: Number 2
DOI: 10.5547/01956574.39.2.phar
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Abstract:
Although technological progress can alter the relative costs of different energy sources, fossil fuels inevitably will be displaced as depletion raises their costs and makes them uncompetitive. They may be displaced sooner if they are taxed to internalize negative externalities. Currently, wind generation or nuclear power, supplemented by bulk electricity storage, are the most feasible alternatives to fossil fuels for electricity generation. The ERCOT ISO in Texas provides a realistic model for examining the costs of replacing fossil fuels by wind generation and storage, and for comparing wind power with generation based on nuclear and storage. ERCOT is relatively isolated from neighboring grids, and wind power was almost a quarter of its total generating capacity at the end of 2016. Using the ERCOT example, we also discuss how the long-run configuration of the electricity supply system affects evolution away from a system dominated by natural gas.



Potential Futures for Russian Natural Gas Exports

Peter R. Hartley and Kenneth B. Medlock III

Year: 2009
Volume: Volume 30
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI-6
View Abstract

Abstract:
Russia is a dominant supplier of natural gas, especially to Europe, and has the resources to become even more dominant in the future. Nevertheless, we show that Russia�s ability to influence the world natural gas market is limited in the longer term by competition from alternative suppliers.





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