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Linking Natural Gas Markets: Is LNG Doing Its Job?

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  • Anne Neumann

Abstract

The increase in liquefied natural gas trade has accelerated the integration of previously segmented markets in North America, Europe, and Asia. This paper provides evidence on the integration of the transatlantic natural gas market. We test the theoretical proposition that in integrating markets commodity prices should move closer than before. Using 2,059 pairs of daily spot prices for natural gas in North America and Europe we investigate price dynamics covering the period from 1999 until 2008. We apply the Kalman Filter technique to gain detailed information on trends inherent over time. Results suggest an increasing convergence of spot prices on either side of the Atlantic Basin.

Suggested Citation

  • Anne Neumann, 2008. "Linking Natural Gas Markets: Is LNG Doing Its Job?," Discussion Papers of DIW Berlin 822, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp822
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    References listed on IDEAS

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    More about this item

    Keywords

    Market integration; spot markets; LNG; natural gas;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • F15 - International Economics - - Trade - - - Economic Integration

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