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US Natural Gas Policy: Evolvement and Enlightenments(No.2,2016)


By Du Yusong, Research Institute of Market Economy of DRC, & Du Haoran, Peking University

Research Report No.2,2016 (Total 4885), 2016-1-13

Abstract: Due to factors including surging oil price and US regulation on inter-state natural gas marketing price in 1970s, natural gas shortage occurred in US. To tackle natural gas shortage, from 1978 US government implemented a series of policies to relax regulation on natural gas. Though unable to give a swift boost to the development of natural gas market, relaxed policies set up a new market structure and laid an institutional foundation for shale gas revolution in the 21st century. The sharp shift from shortage to abundance in US natural gas market and relevant policy evolvement during the past 40 years indicate that a good regulation policy should feature three aspects: 1. A regulation policy, while protecting the interests of consumers, should also provide adequate impetus for producers; 2. A regulation policy must be able to adapt to changes in natural gas market and other energy markets; and 3. A regulation policy should give full consideration to the impact induced by environmental policy changes on natural gas market.

Key words: natural gas market, policy, mutual reference, US