Open Access and the Evolution of the U.S. Spot Market for Natural Gas
Federal regulations promoting open-access transportation dramatically altered the organizational structure of the U.S. market for natural gas in the 1980s, generally unbundling the merchant and transport functions of interstate pipelines. An empirical analysis of wellhead spot prices is undertaken to examine the effect of open access on the geographic scope of the spot market. Using monthly spot price data from 1984-91, three statistical tests are applied and compared: price correlations, Granger causality, and cointegration. We find that open access integrated the regional wellhead markets into a national competitive market for natural gas. The effects of unbundling on contracts for natural gas are then investigated. Incentives for long-term contracts between pipelines and producers are shown to be effectively removed by the introduction of competitive buying and selling of gas at the wellhead through open access. Copyright 1994 by the University of Chicago.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harry G. Broadman, 1987. "Competition in Natural Gas Pipeline Wellhead Supply Purchases," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 113-134.
- Pier Giorgio Ardeni, 1989. "Does the Law of One Price Really Hold for Commodity Prices?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 661-669.
- Pierce, David A. & Haugh, Larry D., 1979. "The characterization of instantaneous causality : A comment," Journal of Econometrics, Elsevier, vol. 10(2), pages 257-259, June.
- Masten, Scott E & Crocker, Keith J, 1985. "Efficient Adaptation in Long-term Contracts: Take-or-Pay Provisions for Natural Gas," American Economic Review, American Economic Association, vol. 75(5), pages 1083-1093, December.
- Hubbard, R Glenn & Weiner, Robert J, 1991.
"Efficient Contracting and Market Power: Evidence from the U.S. Natural Gas Industry,"
Journal of Law and Economics,
University of Chicago Press, vol. 34(1), pages 25-67, April.
- R. Glenn Hubbard & Robert J. Weiner, 1990. "Efficient Contracting and Market Power: Evidence from the U.S. Natural Gas Industry," NBER Working Papers 3502, National Bureau of Economic Research, Inc.
- Klein, Chris & Rifkin, Edward J. & Uri, Noel D., 1985. "A note on defining geographic markets," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 109-119, February.
- Dennis W. Carlton, 1984. "Futures markets: Their purpose, their history, their growth, their successes and failures," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 4(3), pages 237-271, 09.
- 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 168-185, March.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
- Slade, Margaret E, 1986. "Exogeneity Tests of Market Boundaries Applied to Petroleum Products," Journal of Industrial Economics, Wiley Blackwell, vol. 34(3), pages 291-303, March.
- Harry G. Broadman, 1986. "Elements of Market Power in the Natural Gas Pipeline Industry," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 119-138. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:v:37:y:1994:i:2:p:477-517. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
If references are entirely missing, you can add them using this form.