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Asymmetric price responses, market integration and market power: A study of the U.S. natural gas market

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  • Murry, Donald
  • Zhu, Zhen

Abstract

We studied the market performance at selected, representative natural gas trading hubs in the U.S. and documented different price behaviors among various hubs. With NYMEX prices as the competitive benchmark, we found empirically that the spot price responses at some trading hubs were systematically asymmetric, thus demonstrating a market advantage by either buyers or sellers. We further found that the presence of market power was a very plausible explanation for this price behavior at some hubs.

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  • Murry, Donald & Zhu, Zhen, 2008. "Asymmetric price responses, market integration and market power: A study of the U.S. natural gas market," Energy Economics, Elsevier, vol. 30(3), pages 748-765, May.
    • Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:748-765
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    2. Scarcioffolo, Alexandre Ribeiro & Etienne, Xiaoli L., 2019. "How connected are the U.S. regional natural gas markets in the post-deregulation era? Evidence from time-varying connectedness analysis," Journal of Commodity Markets, Elsevier, vol. 15(C), pages 1-1.
    3. Capece, Guendalina & Cricelli, Livio & Di Pillo, Francesca & Levialdi, Nathan, 2012. "New regulatory policies in Italy: Impact on financial results, on liquidity and profitability of natural gas retail companies," Utilities Policy, Elsevier, vol. 23(C), pages 90-98.
    4. Narayan, Paresh Kumar & Popp, Stephan, 2009. "Can the electricity market be characterised by asymmetric behaviour?," Energy Policy, Elsevier, vol. 37(11), pages 4364-4372, November.
    5. Rafael Garaffa, Alexandre Szklo, André F. P. Lucena, and José Gustavo Féres, 2019. "Price Adjustments and Transaction Costs in the European Natural Gas Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    6. Capece, Guendalina & Cricelli, Livio & Di Pillo, Francesca & Levialdi, Nathan, 2010. "A cluster analysis study based on profitability and financial indicators in the Italian gas retail market," Energy Policy, Elsevier, vol. 38(7), pages 3394-3402, July.
    7. 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.
    8. Maarten J. Arentsen, 2011. "Trends in Gas," Chapters, in: Matthias Finger & Rolf W. Künneke (ed.), International Handbook of Network Industries, chapter 11, Edward Elgar Publishing.
    9. Potts, Todd B. & Yerger, David B., 2016. "Marcellus Shale and structural breaks in oil and gas markets: The case of Pennsylvania," Energy Economics, Elsevier, vol. 57(C), pages 50-58.
    10. Choi, Gobong & Heo, Eunnyeong, 2017. "Estimating the price premium of LNG in Korea and Japan: The price formula approach," Energy Policy, Elsevier, vol. 109(C), pages 676-684.
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    12. Mohammadi, Hassan, 2011. "Market integration and price transmission in the U.S. natural gas market: From the wellhead to end use markets," Energy Economics, Elsevier, vol. 33(2), pages 227-235, March.

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