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Evolution of the U.S. Natural Gas Industry in Response to Changes in Transaction Costs

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  • Carol A. Dahl
  • Thomas K. Matson

Abstract

The U.S. natural gas industry traditionally had producers, interstate pipelines, and distributors linked together via bilateral, long-term contracts. Recently the Federal Energy Regulatory Commission has encouraged buyers and sellers to deal directly with each other, leading first to a spot market and marketers, then to market hubs and a slight trend back to longer-term contracts. Marketers and pipelines have consolidated to take advantage of economies of scope and systems effects which larger networks provide. We use transaction cost economics to explain the evolution of exchange relationships with open access to transportation and the unbundling of transportation and storage from sales.

Suggested Citation

  • Carol A. Dahl & Thomas K. Matson, 1998. "Evolution of the U.S. Natural Gas Industry in Response to Changes in Transaction Costs," Land Economics, University of Wisconsin Press, vol. 74(3), pages 390-408.
  • Handle: RePEc:uwp:landec:v:74:y:1998:i:3:p:390-408
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    Cited by:

    1. Dahl, Carol & Ko, James, 1998. "The effect of deregulation on US fossil fuel substitution in the generation of electricity," Energy Policy, Elsevier, vol. 26(13), pages 981-988, November.
    2. Benoit A. Aubert & Jean Francois Houde & Suzanne Rivard & Michel Patry, 0. "Determinants of contract completeness for information technology outsourcing," Information Technology and Management, Springer, vol. 0, pages 1-16.
    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. Littlechild, Stephen, 2012. "The process of negotiating settlements at FERC," Energy Policy, Elsevier, vol. 50(C), pages 174-191.
    5. Avalos, Roger & Fitzgerald, Timothy & Rucker, Randal R., 2016. "Measuring the effects of natural gas pipeline constraints on regional pricing and market integration," Energy Economics, Elsevier, vol. 60(C), pages 217-231.
    6. John Cuddington & Zhongmin Wang, 2006. "Assessing the Degree of Spot Market Integration for U.S. Natural Gas: Evidence from Daily Price Data," Journal of Regulatory Economics, Springer, vol. 29(2), pages 195-210, March.
    7. repec:spr:infotm:v:18:y:2017:i:4:d:10.1007_s10799-016-0265-5 is not listed on IDEAS
    8. Berry, David, 2002. "The market for tradable renewable energy credits," Ecological Economics, Elsevier, vol. 42(3), pages 369-379, September.
    9. Giovanni Goldoni, 2007. "Un bilancio delle liberalizzazioni dei settori dell’energia elettrica e del gas naturale in Italia e in Europa," Working Papers 40/2007, University of Verona, Department of Economics.

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    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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