Natural Gas Transportation Price Regulation and the Dash for Gas
Payne Institute Senior Research Associate Greer Gosnell and Payne Faculty Fellow Ian Lange write about the large reduction in natural gas prices due to horizontal fracturing that has led to an unprecedented expansion in natural gas use for electricity generation. Another innovation that helped facilitate the expansion of natural gas electricity generation is the deregulation of natural gas pipeline transportation. Previous to June 2008, the price for transacting space in natural gas pipelines was set by the Federal Energy Regulatory Commission (FERC). FERC Order 712 allowed transactions under one year in duration, generally known as the secondary market, to transact at market prices. This regulatory innovation should facilitate natural gas power plants in procuring natural gas and lead to expanded generation. August 18, 2020.