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Infrastructure Investments and Resource Adequacy in the Restructured US Natural Gas Market – Is Supply Security at Risk?

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Christian von Hirschhausen

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Abstract

The objective of this paper is to analyze the development of US natural gas infrastructure over the last two decades and to discuss its perspectives. In particular, we focus on the relationship between the regulatory framework for the natural gas sector and the development of investment in LNG terminals, interstate pipelines, and storage facilities. We also discuss some cross-sectional investment issues related to financing (cost of capital, financial markets) and regulation (price caps, siting). We conclude that while some improvements in the regulatory framework might enhance investments in the US natural gas sector, there is no reason to be overly concerned about infrastructure investments, resource adequacy, or supply security.

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Paper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0618.

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Date of creation: Dec 2006
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Handle: RePEc:mee:wpaper:0618

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  1. Buehler, Stefan & Schmutzler, Armin & Benz, Men-Andri, 2004. "Infrastructure quality in deregulated industries: is there an underinvestment problem?," International Journal of Industrial Organization, Elsevier, vol. 22(2), pages 253-267, February. [Downloadable!] (restricted)
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  2. William J. Baumol & Alvin K. Klevorick, 1970. "Input Choices and Rate-of Return Regulation: An Overview of the Discussion," Bell Journal of Economics, The RAND Corporation, vol. 1(2), pages 162-190, Autumn. [Downloadable!] (restricted)
  3. von Hirschhausen, Christian & Beckers, Thorsten & Brenck, Andreas, 2004. "Infrastructure regulation and investment for the long-term--an introduction," Utilities Policy, Elsevier, vol. 12(4), pages 203-210, December. [Downloadable!] (restricted)
  4. Hausman, Jerry & Myers, Stewart, 2002. "Regulating the United States Railroads: The Effects of Sunk Costs and Asymmetric Risk," Journal of Regulatory Economics, Springer, vol. 22(3), pages 287-310, November. [Downloadable!] (restricted)
  5. Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-85, March. [Downloadable!] (restricted)
  6. M.G. Pollitt, 2000. "The Declining Role of the State in Infrastructure Investments in the UK," Cambridge Working Papers in Economics 0001, Faculty of Economics, University of Cambridge. [Downloadable!]
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  1. Jamasb, T. & Pollitt, M.G. & Triebs, T., 2008. "Productivity and Efficiency of US Gas Transmission Companies: A European Regulatory Perspective," Cambridge Working Papers in Economics 0812, Faculty of Economics, University of Cambridge. [Downloadable!]
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