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Federal Reserve Bank of Dallas
Working Papers
Deliverability and regional pricing in U.S. natural gas markets
Stephen P. A. Brown
Mine K. Yucel

During the 1980s and early '90s, interstate natural gas markets in the United States made a transition away from the regulation that characterized the previous three decades. With abundant supplies and plentiful pipeline capacity, a new order emerged in which freer markets and arbitrage closely linked natural gas price movements throughout the country. After the mid-1990s, however, U.S. natural gas markets tightened and some pipelines were pushed to capacity. We look for the pricing effects of limited arbitrage through causality testing between prices at nodes on the U.S. natural gas transportation system and interchange prices at regional nodes on North American electricity grids. Our tests do reveal limited arbitrage, which is indicative of bottlenecks in the U.S. natural gas pipeline system.

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Stephen P. A. Brown & Mine K. Yucel, Deliverability and regional pricing in U.S. natural gas markets, Federal Reserve Bank of Dallas, Working Papers 0802, 2008.
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Note: Published as: Brown, Stephen P.A. and Mine K. YĆ¼cel (2008), "Deliverability and Regional Pricing in U.S. Natural Gas Markets," Energy Economics 30 (5): 2441-2453.
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Subject headings:
Keywords: Natural gas; Arbitrage; Pricing
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