Effects of liberalizing the natural gas market in western Europe

Journal Article · Sun Dec 31 04:00:00 EST 1995 · Energy Journal

DOI:https://doi.org/10.5547/ISSN0195-6574-EJ-Vol16-No1-6· OSTI ID:376902

Golombek, R ^[1]

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1. Foundation for Research in Economics and Business Administration, Oslo (Norway)

This paper uses a numerical model to examine the long-run impact of a radical liberalization of the West-European natural gas markets. We study profit maximizing Cournot producers facing an ideal third party access regime for gas transport. producers sell gas weather to large users in the manufacturing industry and to gas-fired thermal power plants, or to loval distribution companies. We first examine the case where no traders exploit arbitrage possibilities and some producers have limited access to the markets. In this equilibrium net prices differ across markets. These differences disappear in the second case where traders are introduced. The third case focuses on a complete European market for natural gas in which traders exploit all arbitrage possibilities and all producers can sell gas in all markets. We also study the impact on the complete European market of changes in costs for production, transport, and distribution. Finally, welfare implications from a liberalization of the West-European natural gas markets are discussed. We argue that a radical liberalization could increase economic welfare in Western Europe by 15% to 20% in the long run. 35 refs., 9 tabs.

• Sponsoring Organization: USDOE
• OSTI ID: 376902
• Journal Information: Energy Journal, Journal Name: Energy Journal Journal Issue: 1 Vol. 16; ISSN ENJODN; ISSN 0195-6574
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
COST
EUROPE
MARKET
NATURAL GAS
NATURAL GAS INDUSTRY
PIPELINES
PRICES
PRODUCTION
SUPPLY AND DEMAND