North American energy system responses to natural gas price shocks

Maxwell Brown, Sauleh Siddiqui, Charalampos Avraam, John Bistline, Joseph Decarolis, Hadi Eshraghi, Sara Giarola, Matthew Hansen, Peter Johnston, Saroj Khanal and Anahi Molar-Cruz

Energy Policy, 2021, vol. 149, issue C

Abstract: As of 2020, North American natural gas extraction and use in the electricity sector have both reached all-time highs. The combination of North America's increased reliance on natural gas with a potential disruption to the natural gas market has several energy security implications. Additionally, policymakers interested in economic resiliency will find this study's results useful for informing the implications of the energy sectors' long-term planning and investment decisions. This paper evaluates how both the electricity and natural gas sectors could respond to hypothetical gas price shocks under different system configurations. We impose unforeseen natural gas price shocks under reference and alternative configurations resulting from a renewable generation mandate or variations to renewable capacity costs. Results from several different models are presented for the electricity and natural gas sectors separately for Canada, Mexico, and the United States. Generally, the US becomes more (less) reliant on electricity imports from Canada given a high (low) gas price shock but increases (decreases) exports to Mexico. The renewable mandate is demonstrated to buffer electricity price increases under high price shocks but price reductions under the low price shocks are dampened given less flexibility to take advantage of the low-priced natural gas. The United States is demonstrated to reduce natural gas production and net exports with high natural gas price shocks given a reduction in demand.

Keywords: Energy security; Resilience; Price shocks (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421520307576
Full text for ScienceDirect subscribers only

Related works:
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:eee:enepol:v:149:y:2021:i:c:s0301421520307576

DOI: 10.1016/j.enpol.2020.112046

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().