Competition in the Natural Gas Pipeline Industry: An Economic Policy Analysis

This work considers the potential effects of competition in the natural gas pipeline industry. Contrary to published government reports, the study concludes that federal regulation in the industry is no longer necessary to limit the power of current pipeline suppliers. Rather, potential entry by nearby suppliers - a competitive factor largely ignored in most economic analyses - will promote competition in most major markets. The purpose of the work is two-fold: to quantify the competitive effect of potential market entry by natural gas suppliers; and to demonstrate that previous industry analyses, which fail to consider these competitive effects, are likely to be in error. This compilation and analysis of market-by-market data on deliveries by pipeline, location of nearby deliveries, and location of nearby pipelines which make no deliveries, should be of interest to scholars, policymakers and industry analysts concerned with the natural gas industry and its regulation.