The pricing of natural gas in U.S. markets
AbstractStephen Brown and Mine Yücel 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 Yücel 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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Bibliographic InfoArticle provided by Federal Reserve Bank of Dallas in its journal Economic and Financial Policy Review.
Volume (Year): (1993)
Issue (Month): Apr ()
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0802, Federal Reserve Bank of Dallas.
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