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The Diminishing Role of Regulation in the Natural Gas Industry

Abstract:
The natural gas industry grew to maturity under a system of strong monopoly power of pipelines and local distribution companies (LDCs) and balkanized markets at wellheads and burnertips. Recent developments in the industry, especially phased deregulation of wellhead prices implemented by the Natural Gas Policy Act of 1978 (NGPA) and competition induced by the gas bubble since 1982, have somewhat reduced pipeline monopoly power in some markets. Considerations of economic efficiency and economic justice now require that competitive forces be strengthened further. The FERC's Order 436 was an attempt to do that.

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Energy Specializations: Natural Gas – Policy and Regulation

JEL Codes: Q40: Energy: General, Q48: Energy: Government Policy, Q35: Hydrocarbon Resources, L95: Gas Utilities; Pipelines; Water Utilities

Keywords: Natural gas industry, Deregulation, Energy policy, Economic efficiency, Competition

DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No2-1

Published in Volume 7, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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