Is it all oil?

Arbeitspapier

After opening up of the Interconnector, the liberalized UK natural gas market and the regulated Continental gas markets became physically integrated. The oil-linked Continental gas price became dominant, due to both the large volume of the Continental market and to the fact that the significant call options embedded in the complex take-or-pay contracts make these contracts the marginal source of supply. However, in an interim period – after deregulation of the UK gas market (1995) and the opening up of the Interconnector (1998) – the UK gas market had neither government price regulation nor a physical Continental gas linkage. We use this period – which for natural gas markets displays an unusual combination of deregulation and autarky – as a natural experiment to explore if decoupling of natural gas prices from prices of other energy commodities, such as oil and electricity, took place. Using monthly price data, we find a highly integrated market where wholesale demand seems to be for energy rather than a specific energy source.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1401

Classification and Topics

• Classification: Wirtschaft ; Energy: Government Policy ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; Industry Studies: Transportation and Utilities: General ; Market Structure, Firm Strategy, and Market Performance: General
• Subject: energy markets ; price interlinkages ; cointegration analysis ; Erdgas ; Preis ; Erdölpreis ; Internationaler Preiszusammenhang ; Schätzung ; Grossbritannien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Asche, Frank ; Osmundsen, Petter ; Sandsmark, Maria
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/18765
• Last update: 10.03.2025, 11:43 AM CET