Cartelization in gas markets: Studying the potential for a “Gas OPEC”

Gabriel, Steven A.; Rosendahl, Knut Einar; Egging, Ruud; Avetisyan, Hakob; Siddiqui, Sauleh

doi:10.1016/j.eneco.2011.05.014

Cited by 51 publications

(29 citation statements)

References 16 publications

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“…These are widely used to analyse scenarios and investment requirements, most prominently in natural gas (e.g., Gabriel et al, 2012b;Egging et al, 2010;Lise and Hobbs, 2008). However, such models are usually calibrated to reflect a certain situation in the base year, and the assumptions regarding the conjectural variations of players are then assumed to remain fixed for the entire simulation horizon.…”

Section: Discussionmentioning

confidence: 99%

“…This was due to advances in algorithms and computation power, which allowed to drop many simplifications necessary in the early models. Recent applications for the natural gas market include the World Gas Model (Gabriel et al, 2012b;Egging et al, 2010), GaMMES (Abada et al, 2013), and Gastale (Lise and Hobbs, 2008). There were also a number of models for electricity markets (e.g.…”

Section: Introductionmentioning

confidence: 99%

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Endogenous Shifts in OPEC Market Power: A Stackelberg Oligopoly with Fringe

Huppmann

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This article proposes a two-stage oligopoly model for the crude oil market. In a game of several Stackelberg leaders, market power increases endogenously as the spare capacity of the competitive fringe goes down. This effect is due to the specific cost function characteristics of extractive industries. The model captures the increase of OPEC market power before the financial crisis and its drastic reduction in the subsequent turmoil at the onset of the global recession. The two-stage model better replicates the price path over the years 2003-2011 compared to a standard simultaneous-move, onestage Nash-Cournot model with a fringe. This article also discusses how most large-scale numerical equilibrium models, widely applied in the energy sector, over-simplify and potentially misinterpret market power exertion. Terms of use: Documents in

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Endogenous Shifts in OPEC Market Power: A Stackelberg Oligopoly with Fringe

Huppmann

2013

SSRN Journal

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“…Boots et al (2004) considered the successive oligopoly (combination 1&3) in a multiregional network model. Egging et al (2007) provided an even finer disaggregation of the value chain, while Gabriel et al (2010) studied the potential effects of a gas 'OPEC'.…”

Section: The European Natural Gas Industry and Modelsmentioning

confidence: 99%

“…8 See Fuglseth and Grønhaug (2001) for a decision oriented experiment. 9 Gabriel et al (2010) provide a summary of eight gas-trade models. The two models of the European market and one of three with a world-wide perspective consider market power and are of complementarity type, while models of North-America do not consider market power and are mostly optimization models.…”

Section: The European Natural Gas Industry and Modelsmentioning

confidence: 99%

Price Patterns Resulting from Different Producer Behavior in Spatial Equilibrium

Mathiesen

2012

SSRN Journal

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We are concerned with economic analyses of markets from the perspective of supporting a decision maker selling in the market. The competitive pressure and the price formation are central issues. The goal of this paper is to highlight the remarkably different price patterns obtained from different modes of seller behavior in a spatial market. This is exemplified by models of price taking versus the oligopolistic Cournot mode of behavior. Although a particular market, namely the European market for natural gas is used for illustration, the insights from this exercise apply to any industry where suppliers have market power, their locations differ, and their costs of supplying individual segments of the market are non-negligible and differ. When market power is present and one seeks insight into competition and price formation, details in other dimensions cannot compensate for not modeling the exertion of market power.

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“…effects of renewable energy penetration in Europe for gains from trade and carbon dioxide emissions in the power sector (Abrell and Rausch, 2016) or the strategic behavior of producers in either power (Bushnell, 2003;Pineau et al, 2011), natural gas (Gabriel et al, 2005;Egging et al, 2008;Holz et al, 2008;Gabriel et al, 2012b;Abada et al, 2013), oil (Huppmann and Holz, 2012) or coal industries (Haftendorn and Holz, 2010). This paper represents the very first application of the MCP approach to model the helium industry.…”

mentioning

confidence: 99%

Phasing out the U.S. Federal Helium Reserve: Policy insights from a world helium model

Massol

Rifaat

2018

Resource and Energy Economics

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This paper develops a detailed partial equilibrium model of the global helium market to study the effects of the recently decided rapid phase out of the U.S. Federal Helium Reserve (FHR), a vast strategic stockpile accumulated during the 1960s. The model incorporates a detailed representation of that industry and treats both helium producers and the FHR as players in a dynamic non-cooperative game. The goal of each player is assumed to be the maximization of discounted profit, subject to technical and resource constraints. We consider two alternative policies aimed at organizing the phase out of the FHR: the currently implemented one and a less stringent one whereby the FHR would be allowed to operate as a profit-maximizing agent during a 20-year extended period. Evidences gained from a series of market simulations indicate that, compared to the current policy, the less stringent policy mandate systematically increases the financial return to the U.S. federal budget, always enhances environmental outcomes as it lowers helium venting into the atmosphere, and also augments global welfare in three out of the four scenarios considered in the paper.

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Cartelization in gas markets: Studying the potential for a “Gas OPEC”

Cited by 51 publications

References 16 publications

Endogenous Shifts in OPEC Market Power: A Stackelberg Oligopoly with Fringe

Endogenous Shifts in OPEC Market Power: A Stackelberg Oligopoly with Fringe

Price Patterns Resulting from Different Producer Behavior in Spatial Equilibrium

Phasing out the U.S. Federal Helium Reserve: Policy insights from a world helium model

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