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The pricing of natural gas in U.S. markets

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Abstract

Stephen Brown and Mine Ycel examine how different natural gas users and the market institutions serving them affect the transmission of price changes throughout various markets for natural gas. Electrical utilities and industrial users buy much of their natural gas in a competitive spot market served by brokers and interstate pipeline companies. In contrast, most commercial and residential customers are dependent on local distribution companies, which earn a regulated rate of return and buy their gas under long-term contracts. ; Using time-series methods, Brown and Ycel find that even in the long run, changes in prices are not transmitted uniformly throughout the various markets for natural gas. Electrical and industrial customers have seen a greater benefit from falling natural gas prices than commercial and residential customers. Differences in market institutions and in the ability of the end users to switch fuels may account for the lack of uniformity.

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  • Stephen P. A. Brown & Mine K. Yücel, 1993. "The pricing of natural gas in U.S. markets," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Apr, pages 41-51.
    • Handle: RePEc:fip:fedder:y:1993:i:apr:p:41-51
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    Cited by:

    1. Brown, Stephen P.A. & Yücel, Mine K., 2008. "Deliverability and regional pricing in U.S. natural gas markets," Energy Economics, Elsevier, vol. 30(5), pages 2441-2453, September.
    2. Nguyen, Bao H. & Okimoto, Tatsuyoshi, 2019. "Asymmetric reactions of the US natural gas market and economic activity," Energy Economics, Elsevier, vol. 80(C), pages 86-99.
    3. Hou, Chenghan & Nguyen, Bao H., 2018. "Understanding the US natural gas market: A Markov switching VAR approach," Energy Economics, Elsevier, vol. 75(C), pages 42-53.
    4. Talipova, Aminam & Parsegov, Sergei G. & Tukpetov, Pavel, 2019. "Russian gas exchange: A new indicator of market efficiency and competition or the instrument of monopolist?," Energy Policy, Elsevier, vol. 135(C).
    5. Mohammadi, Hassan, 2011. "Market integration and price transmission in the U.S. natural gas market: From the wellhead to end use markets," Energy Economics, Elsevier, vol. 33(2), pages 227-235, March.

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    Power resources - Prices;

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