Did the liberalization of gas markets deliver the intended results?

Christian van Hirschhausen, Technische Universität Dresden Fakultät Wirtschaftswissenschaften Lehrstuhl für Energiewirtschaft
The process of liberalizing gas markets started about a decade ago in continental Europe, even earlier in the U.K. and the US. Do we have reasons to be satisfied with the outcome? On April 23 2009, an Energy Economics Policy Seminar, jointly organized by TILEC, the Netherlands Bureau for Economic Policy Analysis (CPB), the Dutch Ministry of Economic Affairs (EZ) and the Netherlands Competition Authority (NMa), took place in the Hague. The event, which aimed at assessing the impact of liberalization on prices and investments, was extremely well-attended. Christoph Riechmann (Frontier Economics) argued that prices at the wholesale and retail level continued moving in line with oil prices in the medium- and long-run while the short-run gas price is determined to a larger extent by parameters which are specific for the gas market. Christian van Hirschhausen (DIW, Berlin) argued that the conventional opposition between liberalization, with its focus on improving static efficiency, and investment incentives was over-emphasized in the gas market, where investments in regazification and pipeline infrastructure were forthcoming both in the US and in Europe (although some specific, publicly-sponsored investments might be needed in Eastern Europe).