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A Retrospective Look at Wholesale Gas: Industry Restructuring

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  • Leitzinger, Jeffrey
  • Collette, Martin

Abstract

The purpose of this paper is to identify lessons learned from the restructuring of the natural gas industry. We draw a number of conclusions including that the billions of dollars of savings typically attributed to gas industry restructuring resulted not from competition but because restructuring stranded billions of dollars in contractual purchase obligations, costs that were absorbed by producers and pipelines. The replacement of regulated wholesale merchants by new entrants did not occur because of competitive efficiencies. Competition in wholesale gas marketing has produced consumer benefits in the form of innovation, new product development, broader choices and possibly reduced costs. Bi-lateral contracting led to the development of gas markets, which in turn, produced market-wide diffusion and integration of pricing information. Copyright 2002 by Kluwer Academic Publishers

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  • Leitzinger, Jeffrey & Collette, Martin, 2002. "A Retrospective Look at Wholesale Gas: Industry Restructuring," Journal of Regulatory Economics, Springer, vol. 21(1), pages 79-101, January.
    • Handle: RePEc:kap:regeco:v:21:y:2002:i:1:p:79-101
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    Cited by:

    1. LaPlue, Lawrence D., 2022. "Environmental consequences of natural gas wellhead pricing deregulation," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    2. Lucas W. Davis & Lutz Kilian, 2011. "The Allocative Cost of Price Ceilings in the U.S. Residential Market for Natural Gas," Journal of Political Economy, University of Chicago Press, vol. 119(2), pages 212-241.
    3. Kathleen Arano & Marieta Velikova, 2009. "Price Convergence in Natural Gas Markets: City-Gate and Residential Prices," The Energy Journal, , vol. 30(3), pages 129-154, July.
    4. Xiang, Di & Lawley, Chad, 2019. "The impact of British Columbia's carbon tax on residential natural gas consumption," Energy Economics, Elsevier, vol. 80(C), pages 206-218.
    5. Kyle Olsen & James Mjelde & David Bessler, 2015. "Price formulation and the law of one price in internationally linked markets: an examination of the natural gas markets in the USA and Canada," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 117-142, January.
    6. Duangnate, Kannika & Mjelde, James W. & Bessler, David A., 2015. "Price Dynamics under Structural Changes with Unknown Break Points among North America Natural Gas Spot Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205661, Agricultural and Applied Economics Association.
    7. Arano, Kathleen G. & Blair, Benjamin F., 2008. "An ex-post welfare analysis of natural gas regulation in the industrial sector," Energy Economics, Elsevier, vol. 30(3), pages 789-806, May.
    8. Kannika Duangnate & James W. Mjelde, 2020. "Prequential forecasting in the presence of structure breaks in natural gas spot markets," Empirical Economics, Springer, vol. 59(5), pages 2363-2384, November.
    9. Michael Crew & Paul Kleindorfer, 2012. "Regulatory economics and the journal of regulatory economics: a 30-year retrospective," Journal of Regulatory Economics, Springer, vol. 41(1), pages 1-18, February.
    10. 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.
    11. 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.
    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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