Essay on Natural Gas Market Evolution in US

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Natural Gas Market Evolution in US

In terms of primary energy consumption, United States of America is world’s second largest country . It is about 19.5% of the world’s share. US consumed 69.7 billion cubic feet per day against the production of 65.7 Billion cubic feet per day in 2012 . Crude oil consumption and production of US in 2012 stood at 18.5 and 8.9 million barrels per day respectively. Looking at statistics, it can be said that US is fairly independent as far as Natural gas is concerned. Natural gas accounted for 27% of the primary energy consumed in US .To reach such a level, the natural gas market underwent a lot of reforms. The case presents the evolution of gas market which consumes nearly 20% of natural gas in world.
Nascent stage: State Governments regulated
The natural gas business in US has origin from mid 1800s, when it was a byproduct produced from Coal fields. Natural gas was a byproduct and it was largely for consumed in the same locality where gas is produced1. The key for gas delivery then (and even now) is distribution network. Anticipating the opportunity of natural monopoly the local governments stepped in. These governments had a plan of having a single distribution company (in each municipality) and regulate the price it charges. For the supply of gas with in the municipality and in early stages of the gas market having a single distribution company worked.
In early 1900s inter municipality trade developed with the growth of…