OPEN ACCESS AND THE EMERGENCE OF A COMPETITIVE NATURAL GAS MARKET |
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| Authors: | ARTHUR DE VANY W DAVID WALLS |
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| Institution: | *The authors are Professor of Economics, Institute for Mathematical Behavioral Sciences, University of California, Irvine, and Assistant Professor of Economics, School of Economics and Finance, University of Hong Kong, respectively. This is a revised version of a paper presented at the Western Economic Association International 68th Annual Conference, Lake Tahoe, Nev., June 23, 1993, in a session organized by Glenn A. Worach, University of California, Berkeley. The authors thank conference participants and participants of workshops at the University of California-Los Angeles, University of California-Irvine, the Claremont Graduate School, the University of Oklahoma, Texas A&M University, the Western Regional Science Association Annual Conference in Hawaii, and the Rutgers University Center for Research in Regulated Industries 6th Annual Western Conference. The University of California Transportation Center provided financial support to Walls during the 1991–1992 academic year. |
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| Abstract: | Recent regulatory changes permitted natural gas pipelines to become "open access" transporters. This change in pipeline carrier status dissolved regulatory barriers to markets. This paper describes the institutions that were developed to support exchange in gas markets and observes and evaluates their emergence, evolution, and performance. The institutional and empirical evidence reveals that gas markets rapidly emerged with the dissolution of regulatory barriers. Spot gas prices converged and became highly correlated. A national market for natural gas developed within four years. |
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