The Global Natural Gas Market: Will Transport Cost Reductions Lead to Lower Prices?

Knut Einar Rosendahl and Eirik Sagen ()

The Energy Journal, 2009, vol. Volume 30, issue Number 2, 17-40

Abstract: Reduced transportation costs are usually associated with lower import prices, increased trade and price convergence. In this paper we show that lower transport costs can actually lead to higher import prices in some regions, and price divergence between import regions. Using both a general theoretical approach and a numerical model of the global natural gas market, we demonstrate that the price effect from transport cost reductions depend on the relative distances between regional markets, the choice of transport technology, and supply and demand responsiveness in the different markets. Our numerical results suggest that European consumers would generally be better off if pipeline costs are reduced, while North American consumers would be better off if LNG costs are reduced.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.iaee.org/en/publications/ejarticle.aspx?id=2303 (text/html)
Access to full text is restricted to IAEE members and subscribers.

Related works:
Journal Article: The Global Natural Gas Market: Will Transport Cost Reductions Lead to Lower Prices? (2009)
Working Paper: The Global Natural Gas Market. Will transport cost reductions lead to lower prices? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aen:journl:2009v30-02-a02

Ordering information: This journal article can be ordered from
http://www.iaee.org/en/publications/ejsearch.aspx

Access Statistics for this article

More articles in The Energy Journal from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().