Linking Natural Gas Markets: Is LNG Doing Its Job?

Discussion Papers 822, 12 S.

Anne Neumann

2008. Sep.

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Published in: The Energy Journal 30 (2009), Special Issue, 187-200


The increase in liquefied natural gas trade has accelerated the integration of previously segmented markets in North America, Europe, and Asia. This paper provides evidence on the integration of the transatlantic natural gas market. We test the theoretical proposition that in integrating markets commodity prices should move closer than before. Using 2,059 pairs of daily spot prices for natural gas in North America and Europe we investigate price dynamics covering the period from 1999 until 2008. We apply the Kalman Filter technique to gain detailed information on trends inherent over time. Results suggest an increasing convergence of spot prices on either side of the Atlantic Basin.

Anne Neumann

Research Associate in the Energy, Transportation, Environment Department

JEL-Classification: L95;Q49;F15
Keywords: Market integration, spot markets, LNG, natural gas
Frei zugängliche Version: (econstor)