Supply Response in a Regulated Industry: The Case of Natural Gas
This article contains the application of an econometric model to estimate the price responsiveness of new discoveries of natural gas. The model is fit for the periodprior to the beginning of area rate regulation of the wellhead price of natural gas. The theory of joint costs and the effects of dissi...
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| Veröffentlicht in: | Bell Journal of Economics and Management Science 1971-04, Vol.2 (1), p.94-121 |
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| container_title | Bell Journal of Economics and Management Science |
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| creator | Erickson, Edward W. Spann, Robert M. |
| description | This article contains the application of an econometric model to estimate the price responsiveness of new discoveries of natural gas. The model is fit for the periodprior to the beginning of area rate regulation of the wellhead price of natural gas. The theory of joint costs and the effects of dissimilar inventories of undrilled gas and oil prospects are used to explain the pattern of signs and magnitudes of the coefficients derived. These coefficients are then used to simulate discoveries for the regulatory period and the simulation is compared to the record of actual discoveries. The simulated discoveries are uniformly higher than the actual observed discoveries. A possible explanation of this result is the effect of regulation and changes in regulatory policies upon the elasticity of expectations for gas prices, and a rigorous statement of the relation is developed. We close with a general discussion of the magnitude of price increase necessary to clear the market for new gas discoveries. |
| doi_str_mv | 10.2307/3003163 |
| format | Article |
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The model is fit for the periodprior to the beginning of area rate regulation of the wellhead price of natural gas. The theory of joint costs and the effects of dissimilar inventories of undrilled gas and oil prospects are used to explain the pattern of signs and magnitudes of the coefficients derived. These coefficients are then used to simulate discoveries for the regulatory period and the simulation is compared to the record of actual discoveries. The simulated discoveries are uniformly higher than the actual observed discoveries. A possible explanation of this result is the effect of regulation and changes in regulatory policies upon the elasticity of expectations for gas prices, and a rigorous statement of the relation is developed. We close with a general discussion of the magnitude of price increase necessary to clear the market for new gas discoveries.</description><identifier>ISSN: 0005-8556</identifier><identifier>ISSN: 0741-6261</identifier><identifier>DOI: 10.2307/3003163</identifier><language>eng</language><publisher>Mount Morris, Ill: American Telephone and Telegraph Company</publisher><subject>Crude oil ; Drilling ; Gasoline prices ; Marginal costs ; Market prices ; Natural gas supply ; Oil prices ; Price elasticity ; Price elasticity of supply ; Supply</subject><ispartof>Bell Journal of Economics and Management Science, 1971-04, Vol.2 (1), p.94-121</ispartof><rights>Copyright 1971 American Telephone and Telegraph Company</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c212t-3e4772ff9c505fc4aefba99569ed9fda4430c18f051f53e77d6b707c0f087ac83</citedby></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/3003163$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/3003163$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,780,784,803,27869,27924,27925,58017,58250</link.rule.ids></links><search><creatorcontrib>Erickson, Edward W.</creatorcontrib><creatorcontrib>Spann, Robert M.</creatorcontrib><title>Supply Response in a Regulated Industry: The Case of Natural Gas</title><title>Bell Journal of Economics and Management Science</title><description>This article contains the application of an econometric model to estimate the price responsiveness of new discoveries of natural gas. The model is fit for the periodprior to the beginning of area rate regulation of the wellhead price of natural gas. The theory of joint costs and the effects of dissimilar inventories of undrilled gas and oil prospects are used to explain the pattern of signs and magnitudes of the coefficients derived. These coefficients are then used to simulate discoveries for the regulatory period and the simulation is compared to the record of actual discoveries. The simulated discoveries are uniformly higher than the actual observed discoveries. A possible explanation of this result is the effect of regulation and changes in regulatory policies upon the elasticity of expectations for gas prices, and a rigorous statement of the relation is developed. We close with a general discussion of the magnitude of price increase necessary to clear the market for new gas discoveries.</description><subject>Crude oil</subject><subject>Drilling</subject><subject>Gasoline prices</subject><subject>Marginal costs</subject><subject>Market prices</subject><subject>Natural gas supply</subject><subject>Oil prices</subject><subject>Price elasticity</subject><subject>Price elasticity of supply</subject><subject>Supply</subject><issn>0005-8556</issn><issn>0741-6261</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1971</creationdate><recordtype>article</recordtype><sourceid>K30</sourceid><recordid>eNp10E1LxDAQBuAcFFxX8S8EFDxVJ03TtJ6UouvCoqDrOWTTRLfUpubj0H9vpHv1NLzwMMO8CF0QuMkp8FsKQElJj9ACAFhWMVaeoFPvuxRpzqoFun-P49hP-E370Q5e4_2AZUqfsZdBt3g9tNEHN93h7ZfGjUzCGvwiQ3Syxyvpz9Cxkb3X54e5RB9Pj9vmOdu8rtbNwyZTOclDRnXBeW5MrRgwowqpzU7WNStr3damlUVBQZHKACOGUc15W-44cAUGKi5VRZfoct47OvsTtQ-is9EN6aQg6VXCS0ZYUtezUs5677QRo9t_SzcJAuKvEnGoJMmrWXY-WPcv-wWrE15F</recordid><startdate>19710401</startdate><enddate>19710401</enddate><creator>Erickson, Edward W.</creator><creator>Spann, Robert M.</creator><general>American Telephone and Telegraph Company</general><general>Rand Corp</general><scope>AAYXX</scope><scope>CITATION</scope><scope>HOKLE</scope><scope>K30</scope><scope>PAAUG</scope><scope>PAWHS</scope><scope>PAWZZ</scope><scope>PAXOH</scope><scope>PBHAV</scope><scope>PBQSW</scope><scope>PBYQZ</scope><scope>PCIWU</scope><scope>PCMID</scope><scope>PCZJX</scope><scope>PDGRG</scope><scope>PDWWI</scope><scope>PETMR</scope><scope>PFVGT</scope><scope>PGXDX</scope><scope>PIHIL</scope><scope>PISVA</scope><scope>PJCTQ</scope><scope>PJTMS</scope><scope>PLCHJ</scope><scope>PMHAD</scope><scope>PNQDJ</scope><scope>POUND</scope><scope>PPLAD</scope><scope>PQAPC</scope><scope>PQCAN</scope><scope>PQCMW</scope><scope>PQEME</scope><scope>PQHKH</scope><scope>PQMID</scope><scope>PQNCT</scope><scope>PQNET</scope><scope>PQSCT</scope><scope>PQSET</scope><scope>PSVJG</scope><scope>PVMQY</scope><scope>PZGFC</scope></search><sort><creationdate>19710401</creationdate><title>Supply Response in a Regulated Industry: The Case of Natural Gas</title><author>Erickson, Edward W. ; Spann, Robert M.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c212t-3e4772ff9c505fc4aefba99569ed9fda4430c18f051f53e77d6b707c0f087ac83</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1971</creationdate><topic>Crude oil</topic><topic>Drilling</topic><topic>Gasoline prices</topic><topic>Marginal costs</topic><topic>Market prices</topic><topic>Natural gas supply</topic><topic>Oil prices</topic><topic>Price elasticity</topic><topic>Price elasticity of supply</topic><topic>Supply</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Erickson, Edward W.</creatorcontrib><creatorcontrib>Spann, Robert M.</creatorcontrib><collection>CrossRef</collection><collection>Periodicals Index Online Segment 22</collection><collection>Periodicals Index Online</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - West</collection><collection>Primary Sources Access (Plan D) - International</collection><collection>Primary Sources Access & Build (Plan A) - MEA</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Midwest</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Northeast</collection><collection>Primary Sources Access (Plan D) - Southeast</collection><collection>Primary Sources Access (Plan D) - North Central</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Southeast</collection><collection>Primary Sources Access (Plan D) - South Central</collection><collection>Primary Sources Access & Build (Plan A) - UK / I</collection><collection>Primary Sources Access (Plan D) - Canada</collection><collection>Primary Sources Access (Plan D) - EMEALA</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - North Central</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - South Central</collection><collection>Primary Sources Access & Build (Plan A) - International</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - International</collection><collection>Primary Sources Access (Plan D) - West</collection><collection>Periodicals Index Online Segments 1-50</collection><collection>Primary Sources Access (Plan D) - APAC</collection><collection>Primary Sources Access (Plan D) - Midwest</collection><collection>Primary Sources Access (Plan D) - MEA</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Canada</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - UK / I</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - EMEALA</collection><collection>Primary Sources Access & Build (Plan A) - APAC</collection><collection>Primary Sources Access & Build (Plan A) - Canada</collection><collection>Primary Sources Access & Build (Plan A) - West</collection><collection>Primary Sources Access & Build (Plan A) - EMEALA</collection><collection>Primary Sources Access (Plan D) - Northeast</collection><collection>Primary Sources Access & Build (Plan A) - Midwest</collection><collection>Primary Sources Access & Build (Plan A) - North Central</collection><collection>Primary Sources Access & Build (Plan A) - Northeast</collection><collection>Primary Sources Access & Build (Plan A) - South Central</collection><collection>Primary Sources Access & Build (Plan A) - Southeast</collection><collection>Primary Sources Access (Plan D) - UK / I</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - APAC</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - MEA</collection><jtitle>Bell Journal of Economics and Management Science</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Erickson, Edward W.</au><au>Spann, Robert M.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Supply Response in a Regulated Industry: The Case of Natural Gas</atitle><jtitle>Bell Journal of Economics and Management Science</jtitle><date>1971-04-01</date><risdate>1971</risdate><volume>2</volume><issue>1</issue><spage>94</spage><epage>121</epage><pages>94-121</pages><issn>0005-8556</issn><issn>0741-6261</issn><abstract>This article contains the application of an econometric model to estimate the price responsiveness of new discoveries of natural gas. The model is fit for the periodprior to the beginning of area rate regulation of the wellhead price of natural gas. The theory of joint costs and the effects of dissimilar inventories of undrilled gas and oil prospects are used to explain the pattern of signs and magnitudes of the coefficients derived. These coefficients are then used to simulate discoveries for the regulatory period and the simulation is compared to the record of actual discoveries. The simulated discoveries are uniformly higher than the actual observed discoveries. A possible explanation of this result is the effect of regulation and changes in regulatory policies upon the elasticity of expectations for gas prices, and a rigorous statement of the relation is developed. We close with a general discussion of the magnitude of price increase necessary to clear the market for new gas discoveries.</abstract><cop>Mount Morris, Ill</cop><pub>American Telephone and Telegraph Company</pub><doi>10.2307/3003163</doi><tpages>28</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0005-8556 |
| ispartof | Bell Journal of Economics and Management Science, 1971-04, Vol.2 (1), p.94-121 |
| issn | 0005-8556 0741-6261 |
| language | eng |
| recordid | cdi_proquest_journals_1307176515 |
| source | Business Source Complete; Periodicals Index Online; JSTOR Archive Collection A-Z Listing |
| subjects | Crude oil Drilling Gasoline prices Marginal costs Market prices Natural gas supply Oil prices Price elasticity Price elasticity of supply Supply |
| title | Supply Response in a Regulated Industry: The Case of Natural Gas |
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