Energy in a Competitive Market

Energy in a Competitive Market

Essays in Honour of Colin Robinson

Edited by Lester C. Hunt

This fine collection of original essays is in recognition of Colin Robinson, who has been at the forefront of thinking in energy economics for over 30 years. Energy in a Competitive Market brings together both prominent academics and practitioners to honour his outstanding and unique contribution. The authors cover a wide and fascinating selection of topics incorporating the whole spectrum of energy economics. In doing so, they examine the belief that markets are the key to the effective allocation of resources, a notion which arguably applies as much to energy as it does to any other commodity.

Chapter 5: Efficiency and performance in the gas industry

David Hawdon

Subjects: economics and finance, competition policy, energy economics, public sector economics


5. Efficiency and performance in the gas industry David Hawdon INTRODUCTION AND OUTLINE Perhaps the most obvious characteristic of the gas industry is its rapid growth during recent years. Production of gas worldwide rose by almost 5 per cent between 1998 and 1999, with Russia, Algeria, Norway and Argentina experiencing the most rapid change (IGU, 2000a and 2000b). Output of the North Sea producers (Great Britain, Norway and the Netherlands) has expanded by over 77 per cent during the last decade, supplying large importers such as Germany, Italy, France, Belgium and Spain. International trade has grown as consumption in the leading importers – America, Japan and Germany, and the Asian-Pacific area – has increased rapidly in recent years. These developments point to the success of gas in displacing other fuels in the energy mix, and represent not merely an economic response to relative price changes but in addition a fundamental switch in taste towards less-polluting fuels. Particularly significant has been the growth in markets in power generation, co-generation, transport (sales to natural gas vehicles), cooling and dehumidification (especially in Asian markets). On the policy front, the impact of regulatory reform has been important particularly throughout North America and Europe.1 The deregulation of the electricity sector and its opening to market trading has tended to work in favour of gas as older, less flexible power stations are phased out, and nuclear expansion slowed and in some cases reversed. Countries most recently affected here are Belgium, Canada, Finland, Germany,...

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