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Toward the Integration of European Natural Gas Markets: A Time-Varying Approach

Author

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  • Patricia Renou-Maissant

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

Over thepastfifteenyears,Europeangasmarketshaveradicallychanged.Inordertobuildasingle Europeangasmarket,anewregulatoryframeworkhasbeenestablishedthroughthreeEuropeanGas Directives.Thepurposeofthisarticleistoinvestigatetheimpactofthereformsinthenaturalgas industryonconsumerprices,withaspecificfocusongaspricesforindustrialuse.Thestrengthofthe relationshipbetweentheindustrialgaspricesofsixwesternEuropeancountriesisstudiedbytesting the LawofOnePricefortheperiod1991–2009.Estimationswerecarriedoutusingbothcointegration analysisandtime-varyingparametermodels.Resultshighlightanemergingandon-goingprocessof convergencebetweentheindustrialgaspricesinwesternEuropesince2001forthesixEUmember states.Thestrengthandthelevelofconvergencedifferwidelybetweencountries.Strongintegrationof gas marketsincontinentalEurope,exceptfortheBelgianmarket,hasbeenestablished.Itappearsthat the convergenceprocessbetweencontinentalcountriesandtheUKisnotcompleted.Thus,the integrationofEuropeangasmarketsremainsanopenissueandthequestionofhowfarintegrationwill proceedwillstillbewidelydiscussedinthecomingyears.

Suggested Citation

  • Patricia Renou-Maissant, 2012. "Toward the Integration of European Natural Gas Markets: A Time-Varying Approach," Post-Print hal-02562543, HAL.
    • Handle: RePEc:hal:journl:hal-02562543
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    Cited by:

    1. Bastianin, Andrea & Galeotti, Marzio & Polo, Michele, 2019. "Convergence of European natural gas prices," Energy Economics, Elsevier, vol. 81(C), pages 793-811.
    2. Arthur Thomas & Olivier Massol & Benoît Sévi, 2019. "How are day-ahead prices informative for predicting the next day’s consumption of natural gas?," Post-Print hal-04319396, HAL.
    3. Dukhanina, Ekaterina & Massol, Olivier & Lévêque, François, 2019. "Policy measures targeting a more integrated gas market: Impact of a merger of two trading zones on prices and arbitrage activity in France," Energy Policy, Elsevier, vol. 132(C), pages 583-593.
    4. Woroniuk, D. & Karam, A. & Jamasb, T., 2019. "European Gas Markets, Trading Hubs, and Price Formation: A Network Perspective," Cambridge Working Papers in Economics 1964, Faculty of Economics, University of Cambridge.
    5. Leal, Fernando I. & Rego, Erik E. & de Oliveira Ribeiro, Celma, 2019. "Natural gas regulation and policy in Brazil: Prospects for the market expansion and energy integration in Mercosul," Energy Policy, Elsevier, vol. 128(C), pages 817-829.
    6. Wiggins, Seth & Etienne, Xiaoli L., 2017. "Turbulent times: Uncovering the origins of US natural gas price fluctuations since deregulation," Energy Economics, Elsevier, vol. 64(C), pages 196-205.
    7. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "EU electricity market integration and cross-country convergence in residential and industrial end-user prices," Energy Policy, Elsevier, vol. 165(C).
    8. Wiggins, Seth & Etienne, Xiaoli, 2015. "US Natural Gas Price Determination: Fundamentals and the Development of Shale," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205788, Agricultural and Applied Economics Association.
    9. Nick, Sebastian & Thoenes, Stefan, 2014. "What drives natural gas prices? — A structural VAR approach," Energy Economics, Elsevier, vol. 45(C), pages 517-527.
    10. Kumar, Satish, 2022. "Speed of adjustment in energy and metal prices: Evidence from India," Resources Policy, Elsevier, vol. 78(C).
    11. Szafranek, Karol & Papież, Monika & Rubaszek, Michał & Śmiech, Sławomir, 2023. "How immune is the connectedness of European natural gas markets to exceptional shocks?," Resources Policy, Elsevier, vol. 85(PA).
    12. Chen, Yufeng & Wang, Chuwen & Zhu, Zhitao, 2022. "Toward the integration of European gas futures market under COVID-19 shock: A quantile connectedness approach," Energy Economics, Elsevier, vol. 114(C).
    13. Narayan, Seema & Narayan, Paresh Kumar, 2017. "Estimating the speed of adjustment to target levels: The case of energy prices," Energy Economics, Elsevier, vol. 62(C), pages 419-427.
    14. Cuilin Li & Ya-Juan Du & Qiang Ji & Jiang-bo Geng, 2019. "Multiscale Market Integration and Nonlinear Granger Causality between Natural Gas Futures and Physical Markets," Sustainability, MDPI, vol. 11(19), pages 1-23, October.
    15. Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "A three-step procedure to investigate the convergence of electricity and natural gas prices in the European Union," Energy Economics, Elsevier, vol. 105(C).
    16. Hailemariam, Abebe & Smyth, Russell, 2019. "What drives volatility in natural gas prices?," Energy Economics, Elsevier, vol. 80(C), pages 731-742.
    17. Olivier Massol & Albert Banal-Estañol, 2017. "Market Power and Spatial Arbitrage beween Interconnected Gas Hubs," Working Papers hal-03186965, HAL.
    18. Chiappini, Raphaël & Jégourel, Yves & Raymond, Paul, 2019. "Towards a worldwide integrated market? New evidence on the dynamics of U.S., European and Asian natural gas prices," Energy Economics, Elsevier, vol. 81(C), pages 545-565.
    19. Hupka, Yuri & Popova, Ivilina & Simkins, Betty & Lee, Thomas, 2023. "A review of the literature on LNG: Hubs development, market integration, and price discovery," Journal of Commodity Markets, Elsevier, vol. 31(C).
    20. Ren, Xiaohang & Lu, Zudi & Cheng, Cheng & Shi, Yukun & Shen, Jian, 2019. "On dynamic linkages of the state natural gas markets in the USA: Evidence from an empirical spatio-temporal network quantile analysis," Energy Economics, Elsevier, vol. 80(C), pages 234-252.
    21. Stefan Thoenes, 2014. "Understanding the Determinants of Electricity Prices and the Impact of the German Nuclear Moratorium in 2011," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    22. Kyle Olsen & James Mjelde & David Bessler, 2015. "Price formulation and the law of one price in internationally linked markets: an examination of the natural gas markets in the USA and Canada," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 117-142, January.
    23. Sang-Hyun Kim & Yeon-Yi Lim & Dae-Wook Kim & Man-Keun Kim, 2020. "Swing Suppliers and International Natural Gas Market Integration," Energies, MDPI, vol. 13(18), pages 1-12, September.
    24. Papież, Monika & Rubaszek, Michał & Szafranek, Karol & Śmiech, Sławomir, 2022. "Are European natural gas markets connected? A time-varying spillovers analysis," Resources Policy, Elsevier, vol. 79(C).
    25. Broadstock, David C. & Li, Raymond & Wang, Linjin, 2020. "Integration reforms in the European natural gas market: A rolling-window spillover analysis," Energy Economics, Elsevier, vol. 92(C).

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