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How Far is Gas from becoming a Global Commodity?

Author

Listed:
  • Luis Aguiar-Conraria
  • Gilmar Conceigao
  • Maria Joana Soares

Abstract

While we can say that there is a global market for crude oil, we cannot say the same for natural gas. There is a strand of literature that argues that, in the last decades, gas markets have become less regional and more global. We use wavelets to test this hypothesis and conclude otherwise: although the European and Japanese gas markets are significantly synchronized, they are much less than the oil markets, which we take as the benchmark. We also show that the North American gas market fluctuations are independent of the other gas markets. Finally, we show that the existing synchronization between gas markets almost vanishes once one filters out the effect of oil price variations, suggesting that it is the global oil market that connects the regional gas markets.

Suggested Citation

  • Luis Aguiar-Conraria & Gilmar Conceigao & Maria Joana Soares, 2022. "How Far is Gas from becoming a Global Commodity?," The Energy Journal, , vol. 43(4), pages 179-198, May.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:4:p:179-198
    DOI: 10.5547/01956574.43.4.lagu
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    References listed on IDEAS

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    1. Luís Aguiar-Conraria & Maria Soares, 2011. "Oil and the macroeconomy: using wavelets to analyze old issues," Empirical Economics, Springer, vol. 40(3), pages 645-655, May.
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    3. Nick, Sebastian & Thoenes, Stefan, 2014. "What drives natural gas prices? — A structural VAR approach," Energy Economics, Elsevier, vol. 45(C), pages 517-527.
    4. Zhang, Dayong & Shi, Min & Shi, Xunpeng, 2018. "Oil indexation, market fundamentals, and natural gas prices: An investigation of the Asian premium in natural gas trade," Energy Economics, Elsevier, vol. 69(C), pages 33-41.
    5. Luís Aguiar-Conraria & Maria Joana Soares, 2014. "The Continuous Wavelet Transform: Moving Beyond Uni- And Bivariate Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 344-375, April.
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