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Price Convergence in Natural Gas Markets: City-Gate and Residential Prices

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  • Kathleen Arano
  • Marieta Velikova

Abstract

It has been argued that the restructuring of the natural gas industry have lead to a successful deregulation. Evidence from previous studies has shown that the unbundling of gas services and the requirement of open access have made prices from various segments in the industry more cointegrated. Our results indicate that even the smallest volume natural gas customers—residential consumers have felt the benefits of the industry restructuring. 90 percent of the 50 state level city gate and residential natural gas pairs that we examined showed evidence of cointegration. Further investigation reveals that the price series for more states were cointegrated in the post 1992 period after FERC 636 (the ‘final restructuring rule’) was implemented and when retail unbundling started.

Suggested Citation

  • 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.
    • Handle: RePEc:sae:enejou:v:30:y:2009:i:3:p:129-154
    DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No3-7
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    References listed on IDEAS

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    1. 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.
    2. 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.
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