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Open Access And The Emergence Of A Competitive Natural Gas Market




Recent regulatory changes permitted natural gas pipelines to become "open access" transporters. This change in pipeline carrier status dissolved regulatory barriers to markets. This paper describes the institutions that were developed to support exchange in gas markets and observes and evaluates their emergence, evolution, and performance. The institutional and empirical evidence reveals that gas markets rapidly emerged with the dissolution of regulatory barriers. Spot gas prices converged and became highly correlated. A national market for natural gas developed within four years. Copyright 1994 Western Economic Association International.

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  • Arthur De Vany & W. David Walls, 1994. "Open Access And The Emergence Of A Competitive Natural Gas Market," Contemporary Economic Policy, Western Economic Association International, vol. 12(2), pages 77-96, April.
  • Handle: RePEc:bla:coecpo:v:12:y:1994:i:2:p:77-96

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    References listed on IDEAS

    1. Stigler, George J & Sherwin, Robert A, 1985. "The Extent of the Market," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 555-585, October.
    2. De Vany, Arthur & Walls, W. David, 1992. "When Barriers to Markets Fail: Pipeline Deregulation, Spot Markets, and the Topology of the Natural Gas Market," University of California Transportation Center, Working Papers qt2p030000, University of California Transportation Center.
    3. Arthur De Vany & W. David Walls, 1993. "Pipeline Access and Market Integration in the Natural Gas Industry: Evidence from Cointegration Tests," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-20.
    4. David J. Teece, 1990. "Structure and Organization of the Natural Gas Industry: Differences between the United States and the Federal Republic of Germany and Implications for the Carrier Status of Pipelines," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-36.
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    Cited by:

    1. Apergis, Nicholas & Bowden, Nicholas & Payne, James E., 2015. "Downstream integration of natural gas prices across U.S. states: Evidence from deregulation regime shifts," Energy Economics, Elsevier, vol. 49(C), pages 82-92.
    2. Buchanan, W. K. & Hodges, P. & Theis, J., 2001. "Which way the natural gas price: an attempt to predict the direction of natural gas spot price movements using trader positions," Energy Economics, Elsevier, vol. 23(3), pages 279-293, May.
    3. Matthew Oliver & Charles Mason & David Finnoff, 2014. "Pipeline congestion and basis differentials," Journal of Regulatory Economics, Springer, vol. 46(3), pages 261-291, December.
    4. Cremer, Helmuth & Laffont, Jean-Jacques, 2002. "Competition in gas markets," European Economic Review, Elsevier, vol. 46(4-5), pages 928-935, May.
    5. Barnes-Regueiro, Francisco & Leach, Matthew & Ruth, Matthias, 2002. "The Mexican energy sector: integrated dynamic analysis of the natural gas/refining system," Energy Policy, Elsevier, vol. 30(9), pages 767-779, July.
    6. Frank Asche & Petter Osmundsen & Maria Sandsmark, 2005. "Is It All Oil?," CESifo Working Paper Series 1401, CESifo Group Munich.
    7. Gasmi, Farid & Oviedo, Juan Daniel, 2010. "Investment in transport infrastructure, regulation, and gas-gas competition," Energy Economics, Elsevier, vol. 32(3), pages 726-736, May.
    8. De Vany, A. & Walls, W.D., 1994. "The Law of One Price in a Network: Arbitrage and Price Dynamics in Natural Gas City Gate Markets," Papers 93-94-17, California Irvine - School of Social Sciences.
    9. 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.
    10. Gasmi, Farid & Oviedo, Juan Daniel, 2009. "Investment in Transport Infrastructure, and Gas-Gas Competition," TSE Working Papers 09-121, Toulouse School of Economics (TSE).
    11. Laffont, Jean-Jacques & Gasmi, Farid & Oviedo, Juan Daniel, 2003. "Regional Market Power and Transport Capacity in the Gas Industry," IDEI Working Papers 218, Institut d'Économie Industrielle (IDEI), Toulouse.
    12. Park, Haesun & Mjelde, James W. & Bessler, David A., 2008. "Price interactions and discovery among natural gas spot markets in North America," Energy Policy, Elsevier, vol. 36(1), pages 290-302, January.
    13. Farid Gasmi & Juan Daniel Oviedo, 2012. "Controlling regional monopolies in the natural gas industry: the role of transport capacity," DOCUMENTOS DE TRABAJO 010073, UNIVERSIDAD DEL ROSARIO.

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