Research on imbalance between supply and demand in China's natural gas market under the double-track price system

Jian Chai, Xiaokong Zhang, Quanying Lu, Xuejun Zhang and Yabo Wang

Energy Policy, 2021, vol. 155, issue C

Abstract: Under the double-track price system, alternative energy prices and the spread between liquefied natural gas and pipeline natural gas have created a supply-demand imbalance in China's natural gas market, which poses potential risks to economic development and industrial safety. Based on alternative energy prices, economic development level, and geopolitics, this paper used NARDL (Nonlinear Autoregressive Distributed Lag Model, NARDL) to analyze the effect of the spread on the imbalance in the natural gas market. It was shown that the spread and economic development level had a significant impact on the imbalance. Oil prices and geopolitics didn't have a significant impact in the short term while rising coal prices could alleviate the imbalance. Also, the imbalance and the spread in the natural gas market were likely to form a vicious cycle of mutual increase in the short term. Moreover, the impulse response results showed that the impact intensity of the spread on the natural gas market was greater under the background of “short supply” in 2017. Accordingly, a new pricing policy should be aimed at promoting the market-oriented reform, establishing an asymmetric price adjustment mechanism, and guiding rational consumption.

Keywords: Natural gas; Double-track price system; Imbalance; NARDL; China (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:155:y:2021:i:c:s0301421521002500

DOI: 10.1016/j.enpol.2021.112380

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