Abstract
The purpose of this paper is to identify lessons learned from the restructuring of the natural gas industry. We draw a number of conclusions including that the billions of dollars of savings typically attributed to gas industry restructuring resulted not from competition but because restructuring stranded billions of dollars in contractual purchase obligations, costs that were absorbed by producers and pipelines. The replacement of regulated wholesale merchants by new entrants did not occur because of competitive efficiencies. Competition in wholesale gas marketing has produced consumer benefits in the form of innovation, new product development, broader choices and possibly reduced costs. Bi-lateral contracting led to the development of gas markets, which in turn, produced market-wide diffusion and integration of pricing information.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Associated Gas Distributors v. FERC. 1987. 824 F 2.d 981. D.C. Circuit.
Columbia Gulf Transmission Company. 1987. “Order Approving Contested Offers of Settlement Subject to Conditions and Denying Rehearing.” 39 FERC Paragraph 61,335.
De-Vany, A., and D. W. Walls. 1993. “Pipeline Access and Market Integration in the Natural Gas Industry: Evidence from Cointegration Tests.” Energy Journal 14: 1.
Doane, M. J., and D. F. Spulber. 1994. “Open Access and the Evolution of the U.S. Spot Market for Natural Gas.” Journal of Law and Economics 37: 477.
Energy Information Administration. 1988. “Wellhead Purchases by Interstate Pipeline Companies Since the NGPA.” Table 7.
Energy Information Administration. 1989. Natural Gas Monthly. Table 4.
Energy Information Administration. 1995. “The Value of Underground Storage in Today's Natural Gas Industry.” p. 26.
Energy Information Administration. 1998. “Natural Gas Issues and Trends.” p. 5.
Energy Information Administration. 2000. “Natural Gas Consumption in the United States, 1930-1999.” Historical Natural Gas Annual 1930 through 1999.
FERC Order 380. 1984. “Elimination of Variable Costs from Certain Natural Gas Pipeline Minimum Bill Provisions.” FERC Stats & Regs Paragraph 30,571.
FERC Order 436. 1985. “Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol.” FERC Stats & Regs Paragraph 30,665.
FERC Order 497. 1988. “Standards of Conduct for Interstate Pipelines with Marketing Affiliates.” FERC Stats & Regs Paragraph 30,820.
FERC Order 500. 1987. “Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol.” FERC Stats & Regs Paragraph 30,761.
FERC Order 500-H. 1989. “Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol.” FERC Stats & Regs Paragraph 30,867.
FERC Order 528. 1990. “Order on Remand Staying Collection of Take-or-Pay Fixed Charges.” 53 FERC Paragraph 61,163.
FERC Order 636. 1992. “Pipeline Service Obligations and Revisions to Regulations Governing Self-Implementing Transportation.” FERC Stats & Regs Paragraph 30,939.
FERC Order 637. 2000. “Regulation of Short-Term Natural Gas Transportation Services.” 90 FERC Paragraph 61,109.
Gas Research Institute. 1998. Pipeline Markets in Transition. GRI-97/034.
Holmes, P. A. 1983. “The Implosion at Columbia Gas.” Fortune 185.
King, M. and M. Cuc. 1996. “Price Convergence in North American Natural Gas Spot Markets.” Energy Journal 17(2): 17.
Klein, B., R. G. Crawford, and A. A. Alchain. 1995 “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process.” The Legacy of Ronald Coase in Economic Analysis 100-129.
Maryland People's Counsel v. Federal Energy Regulatory Commission. 1985. 761 F. 2d 780. D.C. Circuit; Maryland People's Counsel v. Federal Energy Regulatory Commission. 1985. 768 F. 2d 450. D.C. Circuit.
Natural Gas Intelligence. 1989. Gas Price Index. 1(39, February).
Natural Gas Intelligence. 1990. Gas Price Index. 3(6, June).
Natural Gas Policy Act. 1978. 15 U.S.C. Sec. 3301.
Tennessee Gas Pipeline. 1997. 79 FERC Paragraph 61,031.
Walls, D. W. 1993. “Competition, Prices and Efficiency in the Deregulated Gas Pipeline Network: A Multivariate Cointegration Analysis.” Journal of Energy and Development 19(1): 1.
Walls, D. W. 1994. “Price Convergence Across Natural Gas Fields and City Markets.” Energy Journal 15(4): 37.
Walls, D. W. 1995. “An Econometric Analysis of Market for Natural Gas Futures.” Energy Journal 16(1): 71.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Leitzinger, J., Collette, M. A Retrospective Look at Wholesale Gas: Industry Restructuring. Journal of Regulatory Economics 21, 79–101 (2002). https://doi.org/10.1023/A:1013678724785
Issue Date:
DOI: https://doi.org/10.1023/A:1013678724785