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Research on imbalance between supply and demand in China's natural gas market under the double-track price system

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  • Chai, Jian
  • Zhang, Xiaokong
  • Lu, Quanying
  • Zhang, Xuejun
  • Wang, Yabo

Abstract

Under the double-track price system, alternative energy prices and the spread between liquefied natural gas and pipeline natural gas have created a supply-demand imbalance in China's natural gas market, which poses potential risks to economic development and industrial safety. Based on alternative energy prices, economic development level, and geopolitics, this paper used NARDL (Nonlinear Autoregressive Distributed Lag Model, NARDL) to analyze the effect of the spread on the imbalance in the natural gas market. It was shown that the spread and economic development level had a significant impact on the imbalance. Oil prices and geopolitics didn't have a significant impact in the short term while rising coal prices could alleviate the imbalance. Also, the imbalance and the spread in the natural gas market were likely to form a vicious cycle of mutual increase in the short term. Moreover, the impulse response results showed that the impact intensity of the spread on the natural gas market was greater under the background of “short supply” in 2017. Accordingly, a new pricing policy should be aimed at promoting the market-oriented reform, establishing an asymmetric price adjustment mechanism, and guiding rational consumption.

Suggested Citation

  • Chai, Jian & Zhang, Xiaokong & Lu, Quanying & Zhang, Xuejun & Wang, Yabo, 2021. "Research on imbalance between supply and demand in China's natural gas market under the double-track price system," Energy Policy, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:enepol:v:155:y:2021:i:c:s0301421521002500
    DOI: 10.1016/j.enpol.2021.112380
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    3. Xie, Gang & Jiang, Fuxin & Zhang, Chengyuan, 2023. "A secondary decomposition-ensemble methodology for forecasting natural gas prices using multisource data," Resources Policy, Elsevier, vol. 85(PA).
    4. Gkillas, Konstantinos & Manickavasagam, Jeevananthan & Visalakshmi, S., 2022. "Effects of fundamentals, geopolitical risk and expectations factors on crude oil prices," Resources Policy, Elsevier, vol. 78(C).
    5. Rui Peng, 2024. "Navigating the Complexities of Energy Economics and Sustainable Development: Insights from the Special Issue," Energies, MDPI, vol. 17(20), pages 1-3, October.
    6. Li, Fengyun & Li, Xingmei, 2022. "An empirical analysis on regional natural gas market of China from a spatial pattern and social network perspective," Energy, Elsevier, vol. 244(PA).
    7. Ziwei Yan & Chunying Cui, 2022. "How Natural Gas Infrastructure Affects Carbon Emission Indicators in Guangdong Province?," Sustainability, MDPI, vol. 14(13), pages 1-26, July.
    8. Ding, Lili & Zhao, Zhongchao & Wang, Lei, 2022. "Probability density forecasts for natural gas demand in China: Do mixed-frequency dynamic factors matter?," Applied Energy, Elsevier, vol. 312(C).
    9. Zhang, Xiaokong & Chai, Jian & Tian, Lingyue & Yang, Ying & Zhang, Zhe George & Pan, Yue, 2023. "Forecast and structural characteristics of China's oil product consumption embedded in bottom-line thinking," Energy, Elsevier, vol. 278(PA).
    10. Xin Guan & Xiangyi Lu & Yang Wen, 2022. "Is China’s Natural Gas Consumption Converging? Empirical Research Based on Spatial Econometrics," Energies, MDPI, vol. 15(24), pages 1-13, December.
    11. Gong, Xu & Jin, Yujing & Liu, Tangyong, 2023. "Analyzing pure contagion between crude oil and agricultural futures markets," Energy, Elsevier, vol. 269(C).

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