Deliverability and regional pricing in U.S. natural gas markets

Stephen Brown and Mine Yucel

No 802, Working Papers from Federal Reserve Bank of Dallas

Abstract: During the 1980s and early '90s, interstate natural gas markets in the United States made a transition away from the regulation that characterized the previous three decades. With abundant supplies and plentiful pipeline capacity, a new order emerged in which freer markets and arbitrage closely linked natural gas price movements throughout the country. After the mid-1990s, however, U.S. natural gas markets tightened and some pipelines were pushed to capacity. We look for the pricing effects of limited arbitrage through causality testing between prices at nodes on the U.S. natural gas transportation system and interchange prices at regional nodes on North American electricity grids. Our tests do reveal limited arbitrage, which is indicative of bottlenecks in the U.S. natural gas pipeline system.

Keywords: Natural gas; Arbitrage; Pricing (search for similar items in EconPapers)
Pages: 24 pages
Date: 2008
New Economics Papers: this item is included in nep-ene
Note: Published as: Brown, Stephen P.A. and Mine K. Yücel (2008), "Deliverability and Regional Pricing in U.S. Natural Gas Markets," Energy Economics 30 (5): 2441-2453.
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Citations: View citations in EconPapers (31)

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