Natural Gas Prices in the Framework of European Union's Energy Transition: Assessing Evolution and Drivers

• Type: Article in International Scientific Journal
• Date: 2023

Authors

Vitor Miguel Ribeiro (Author) FEP; Isabel Soares (Author) FEP; Gustavo Soutinho (Author) FEP

Journal

Title: Energies

Vol. 16 No. 4

Final page: 2029

ISSN: 1996-1073

Publisher: MDPI

Indexing

ISI Web of Knowledge - 1 Citation

ISI Web of Science

Scopus - 2 Citations

Other information

Authenticus ID: P-00X-XTB

DOI: 10.3390/en16042029

Abstract (EN): This study analyzes European natural gas (NG) prices since the eve of the 2008 financial crisis. Spearman's rank correlation coefficients associate prices with and without taxation, whereas a hierarchical clustering analysis clarifies similarities in NG pricing behavior. After performing econometric tests to ensure the satisfaction of classical hypotheses and identify a system of endogenous variables, structured unrestricted and restricted vector autoregressive models are applied to panel data composed of 34 spatial units and 31 units of time drawn from 2007-2022 to confirm the presence of short-term and long-term causal dependencies. The nonparametric analysis identifies three groups of countries that exhibit a differentiated pricing behavior. The parametric analysis reveals a significant and asymmetric short run relation, which is imposed by liquefied natural gas (LNG) imports from Nigeria on the logarithm of NG prices. However, the sign of coefficients associated with lagged LNG imports varies across spatial units belonging to the sample. The error correction term is negative and significant, which implies evidence of cointegration. Since the main result identifies ambiguous short-term effects emerging from the diversification in favor of LNG imports from Nigeria, a straightforward policy recommendation is that this strategic option may be ill advised for Europe and, indirectly, it legitimizes the suggestion that alternative decarbonization options can play a prominent role in European NG markets in the near future.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 46