Natural gas markets

Michał Rubaszek and Karol Szafranek

Chapter 87 in Elgar Encyclopedia of Energy Economics, 2025, pp 346-347 from Edward Elgar Publishing

Abstract: Natural gas is an important source of energy, representing about a quarter and a third of global and US primary energy supply, respectively. It serves various purposes, including residential and commercial heating, industrial production and electricity generation. It is a “bridge” fossil fuel in energy transition as it emits less CO2 than coal or oil and is a perfect complement to unstable renewable sources. Its pivotal role in the European economy became evident after the Russian invasion of Ukraine in 2022. The academic literature extensively explores the natural gas market, highlighting its following characteristics: first, the global natural gas market is segmented into several local markets; second, local markets are strongly integrated; third, US natural gas prices are driven by idiosyncratic shocks and hence are decoupled from crude oil prices; fourth, in the European market, heavily reliant on imports, gas prices maintain a long-term linkage to crude oil prices, which implies decoupling of natural gas markets across the Atlantic.

Keywords: Natural Gas; Energy Prices; Energy Transition; Market Dynamics; Structural Vector Autoregression (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035310364
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