Canadian Gas Exports : Modeling a Market in Disequilibrium

Canada provides a major part of the additional volumes required by the huge American gas market. With a rather high reserves-production ratio, Canadian gas production will face no major technical constraints until the end of the century. However, large distortion due to Canadian regulatory policy and disequilibrium in the US gas market constrain suppl y and demand. In the first section, both volume and price historical regulation are briefly analyzed. Traditional econometric analysis of the Nonh American gas market cannot be used any longer. It is necessary to explicitly take into account the fact that supply of export and demand for import are not necessarily equal to the physical quantities actually exchanged on the market. This paper provides in section 2 a comparison of various limited dependent v,uiable models to deal with this kind of particularity. In this way, parameters of behavioral relationships of the opera.tors are identifiable. The models are intended to provide a realistic background in an era when markets become deregulated. Statistical aspect of the disequilibrium approach used in this paper has been introduced by FAIR and JAFFEE (1972) and developped by MADDALA and NELSON (1974).