Representing GASPEC with the World Gas Model

25 Pages Posted: 5 Jul 2009

See all articles by Ruud Egging

Ruud Egging

SINTEF Technology and Society

Franziska Holz

German Institute for Economic Research (DIW Berlin)

Christian von Hirschhausen

German Institute for Economic Research (DIW Berlin) - Department of International Economics

Stephen A. Gabriel

affiliation not provided to SSRN

Date Written: December 2008

Abstract

This paper presents results of simulating a more collusive behavior of a group of natural gas producing and exporting countries, sometimes called GASPEC. We use the World Gas Model, a dynamic, strategic representation of world gas production, trade, and consumption between 2005 and 2030. In particular, we simulate a closer cooperation of the GASPEC countries when exporting pipeline gas and liquefied natural gas; we also run a more drastic scenario where GASPEC countries deliberately withhold production. The results shows that compared to a Base Case, a gas cartel would reduce total supplied quantities and induce price increases in gas importing countries up to 22%. There is evidence that the natural gas markets in Europe and North America would be affected more than other parts of the world. Lastly, the vulnerability of gas importers worldwide on gas exporting countries supplies is further illustrated by the results of a sensitivity case in which price levels are up to 87% higher in Europe and North America, but non-GEC countries increase production by a mere 10%.

Keywords: natural gas, trade, cartel, collusion, World Gas Model

Suggested Citation

Egging, Ruud and Holz, Franziska and von Hirschhausen, Christian and Gabriel, Stephen A., Representing GASPEC with the World Gas Model (December 2008). DIW Berlin Discussion Paper No. 845, Available at SSRN: https://ssrn.com/abstract=1429213 or http://dx.doi.org/10.2139/ssrn.1429213

Ruud Egging (Contact Author)

SINTEF Technology and Society ( email )

Norway

Franziska Holz

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Christian Von Hirschhausen

German Institute for Economic Research (DIW Berlin) - Department of International Economics ( email )

Mohrenstra├če 58
Berlin, 10117
Germany
+49-30-89789-343 (Phone)
+49/30/897 89 -200 (Fax)

Stephen A. Gabriel

affiliation not provided to SSRN ( email )

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