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Assessing the Degree of Spot Market Integration for U.S. Natural Gas: Evidence from Daily Price Data

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  • John Cuddington
  • Zhongmin Wang

Abstract

This paper assesses the degree of market integration in the U.S. natural gas market following the FERC’s ‘open access’ reforms. Daily spot prices at 76 market locations from 1993 to 1997 are used to examine the geographic extent of the market and the speed with which market forces move prices toward equilibrium in the face of ongoing price shocks. The empirical results suggest that the East and Central regions form a highly integrated market, but that this market is quite segmented from the more loosely integrated Western market. Copyright Springer Science+Business Media, Inc. 2006

Suggested Citation

  • 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.
    • Handle: RePEc:kap:regeco:v:29:y:2006:i:2:p:195-210
    DOI: 10.1007/s11149-006-6035-2
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    More about this item

    Keywords

    Natural gas market; Market integration; Law of one price; L95; Q48;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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