Real Price Of Natural Gas Research Articles

How does the U.S. natural gas market react to demand and supply shocks in the crude oil market?

In this paper we use monthly data (over the period from January 1976 to December 2012) and a structural VAR model to disentangle demand and supply shocks in the global crude oil market and investigate their effects on the real price of natural gas in the United States. We identify the model by assuming that innovations to the real price of crude oil are predetermined with respect to the natural gas market and show that close to 45% of the variation in the real price of natural gas can be attributed to structural supply and demand shocks in the global crude oil market.

Turbulent Times: Uncovering the Origins of US Natural Gas Price Fluctuations Since 1993

In this paper, we investigate supply and demand shocks in the US natural gas market, focusing on how the effects of these shocks have changed over time. Using a sign-identified structural vector autoregression (SVAR) model that allows for both time-varying parameters and stochastic volatility, we decompose the real price of natural gas into supply shocks, aggregate demand shocks driven by changes in the US economic activity, precautionary inventory demand in anticipation of changes in future demand-and-supply conditions, and residual demand shocks not otherwise accounted for by the previous three shocks. Using quarterly data from 1976 to 2015, we find that an unanticipated supply disruption raises natural gas prices, reduces the aggregate economic demand, and lowers the precautionary inventory demand, while negative aggregate demand shocks, on the other hand, depress natural gas prices, reduce natural gas production, and increase precautionary inventory demand. We also find that following a negative precautionary inventory demand shock, aggregate demand driven by real economic activity declines marginally, and the marketed natural gas production and real prices decrease as well. Our results further suggest that such impact responses have evolved considerably over time with changing market conditions.

Natural Gas and U.S. Economic Activity

Previous empirical work has shown that real natural gas prices have a negligible impact on total U.S. industrial production and most of its sub-indices. We reassess these conclusions using a multivariate framework and a time-frame that includes recent developments in the U.S. natural gas market. Our results show that natural gas does affect U.S. economic activity, primarily through changes in its production. The shale gas revolution has changed this relationship—a one percentage point increase in natural gas supply raises total U.S. industrial production by more after 2008 than before.

What drives natural gas consumption in Europe? Analysis and projections

Natural gas is an important fuel source for Europe and it is expected to remain so in the near future. The market power of suppliers is an important structural element of the European natural gas market and long-term investment and contracts necessitate reliable projections of natural gas demand. This research attempts to address this need. It investigates the impact of income, real natural gas prices and the underlying energy demand trend (UEDT) on OECD-Europe natural gas consumption by applying the structural time series technique to annual data over the period 1978 to 2011. The results suggest that, in order of importance, income, the UEDT and natural gas prices all play a role in driving OECD-Europe natural gas consumption with the estimated UEDT having both increasing (gas using) and decreasing (gas saving) periods over the estimation period and the estimated long run income and price elasticities being 1.19 and −0.16 respectively. Furthermore, based upon the estimated relationship, OECD-Europe natural gas consumption is predicted to be somewhere between 572 and 646 bcm (about 472 and 533 mtoe) by 2020.

Estimation of demand function for natural gas in Iran: Evidences based on smooth transition regression models

This paper attempts to study the demand function of natural gas in Iran using smooth transition regression model (STR). To this end, gross domestic productions (GDP), real price of natural gas and temperature have been employed as variables explaining the natural gas demand from 1971 to 2009. The results indicate that natural gas demand follows an LSTR1 nonlinear two-regime model if the real price of natural gas is considered as the transition variable. Estimation results also indicate that the slope parameter approximately equals the high value of 10 and the threshold value is 31.82Rials111 USD=24,700 Rials (IRR) @ April 2013. per one cubic meter consumption of natural gas. The results strongly suggest that natural gas demand follows the gross domestic production during the last years, but temperature has no significant impact on natural gas demand in Iran.

The Effects of Natural Gas Decontrol on Fertilizer Demand, Production Costs, and Income in Agriculture

Under the provisions of the Natural Gas Policy Act of 1978 (NGPA), about 50 percent of natural gas production will be decontrolled in 1985. Whether natural gas is decontrolled under the provisions of NGPA or new decontrol legislation is enacted, real natural gas prices are likely to increase during the next few years. Rising natural gas prices will directly affect agriculture by increasing crop drying and irrigation costs. However, the largest effects will occur indirectly through increases in nitrogenous fertilizer prices; natural gas represents 60 to 70 percent of fertilizer production costs (Lutton and Andrilenas 1983). Because farm production expenses have increased nearly $100 billion from 1970 through 1981 (U.S. Department of Agriculture 1982b) and real farm income has decreased 70 percent during the same period, the decontrol of natural gas is viewed with concern by the agricultural community.

Measuring energy savings using personal trend data

Twelve households are analyzed for details of their gas heating energy consumption before and after insulating to determine energy and dollar savings. These are standard, private insulation jobs done without house doctoring and not including any specific infiltration control measures. Our method uses utility bill data for several years before and after insulating; we discuss three methods of using such data. Average yearly energy savings (change in Normalized Annual Consumption) is 23%, ranging from 6% to 43%. Nine of the 12 households saved money; the payback time is no more than 9 years, even assuming no increase in the real price of natural gas. A simple heat load calculation does not accurately predict energy savings.