Welfare Effects of Gas Industry Reforms in the European Union: An Empirical Analysis

Abstract

The paper offers an exploratory empirical analysis of the impact on consumers’ welfare of the reforms of the gas industry in 15 member states of the European Union. After considering some features of the natural gas industry and of its reform in selected countries, we study the relationship between regulatory reform indicators (as summarized by the REGREF database by the OECD) and price dynamics by means of panel data techniques. We then present a simple exercise of welfare evaluation and to what extent price dynamics and the reforms have an impact on subjective consumers’ satisfaction, as reported by three waves of the Eurobarometro survey. We also compare REGREF indicators with the Market Opening Milestones database, prepared by Copenhagen Economics on behalf of the European Commission. We do not find evidence that privatization per se has an impact on productivity, prices or satisfaction, while vertical disintegration seems to be beneficial.

Keywords: Natural gas industry, privatization, regulatory reform