Handbook on Energy and Climate Change
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Handbook on Energy and Climate Change

Edited by Roger Fouquet

This timely Handbook reviews many key issues in the economics of energy and climate change, raising new questions and offering solutions that might help to minimize the threat of energy-induced climate change.
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Chapter 3: The likelihood and potential implications of a natural gas cartel

Steven A. Gabriel, Arild Moe, Knut Einar Rosendahl and Marina Tsygankova


In 1973 the Organization of Petroleum Exporting Countries (OPEC) shocked the world by taking control of the oil market through price increases and production cutbacks. The history of OPEC, however, goes back to 1960, when Iran, Iraq, Kuwait, Saudi Arabia and Venezuela founded the organization. Can a comparable event take place in the natural gas market; that is, should the market be prepared for the appearance of a ‘gas OPEC’? Already there exists a gas-exporting organization quite similar to the OPEC of the 1960s, the Gas Exporting Countries Forum (GECF), founded in 2001. The GECF member countries currently control almost two-thirds of global gas reserves. So far the Forum has lived up to its name, by acting more like a discussion forum than a forceful organization. The history of OPEC, however, clearly shows that organizations are dynamic by nature, and so the question remains whether a ‘gas OPEC’ will emerge from the GECF, or from another coalition of gas-exporting countries, in the foreseeable future. The current chapter discusses the prospects for a natural gas cartel, taking the GECF as our point of departure. We consider the GECF countries’ position in the current gas market, comparing them with the OPEC countries. Gas markets have certain characteristics that differ from the oil market, and these are important to assess as well. A prerequisite for turning any constellation of gas-exporting countries into a gas cartel is that it is sufficiently profitable to coordinate action.

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