Market structure in the new gas economy: is cartelization possible?

doi:10.1017/CBO9780511493492.014

13 - Market structure in the new gas economy: is cartelization possible?

Published online by Cambridge University Press: 22 September 2009

Amy M. Jaffe and

Edited by

Amy M. Jaffe and

Amy M. Jaffe: Affiliation:
Wallace S. Wilson Fellow for Energy StudiesJames A. Baker III Institute for Public Policy, Rice University
Ronald Soligo: Affiliation:
Professor, Department of EconomicsRice University
David G. Victor: Affiliation:
Stanford University, California
Amy M. Jaffe: Affiliation:
Rice University, Houston
Mark H. Hayes: Affiliation:
Stanford University, California

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Summary

Introduction

Significant growth in trade in natural gas has been a major feature of international energy markets in recent years (see figure 1.3, p. 11). As discussed in earlier chapters in this volume, such growth is expected to accelerate in the coming decades. The increasing importance of natural gas to the major modern economies is raising new concerns regarding the security of gas supplies and the potential formation of a gas cartel similar to the Organization of Petroleum Exporting Countries (OPEC) that currently dominates oil markets. Presently, OPEC's mandate does not cover condensates, natural gas, and other petroleum-based liquids that are not technically defined as crude oil. However, many of the members of OPEC are major players in international gas markets. As growing natural gas use increasingly impinges on market share for oil in the mix of world primary energy demand, OPEC members will be tempted to consider cartelization of their gas sales activities. This chapter investigates the feasibility of the formation of a natural gas cartel and the potential limitations to any monopoly power wielded by such a group.

In considering the possibility of the rise of a gas cartel, this chapter will also postulate consumer country responses to the new reality of a gas-fed world. As gas becomes a more important input to industrialized economies and the volume of gas traded in international markets increases, large consuming countries will begin to focus more and more attention on the security and availability of their gas supplies.

Type: Chapter
Information: Natural Gas and Geopolitics
From 1970 to 2040
, pp. 439 - 464

DOI: https://doi.org/10.1017/CBO9780511493492.014 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2006

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