Economic Theory and Some Aspects of Natural Gas

It is unfortunately the case that a great deal of the information in circulation about energy resources is not quite correct. This is a serious matter because the thing to be avoided at all costs is a sudden peaking of, for example, global oil and gas production, which could not only lead to economic and political chaos, but even to wars as major consuming countries elect to employ their military assets in order to ensure a satisfactory share of remaining resources. There are also complex economic issues being raised by efforts to deregulate natural gas (and electricity) markets, particularly in Europe. I have therefore attempted in this article to extend discussions of these topics that are found in my book on gas (Banks, 1987), as well as my energy economics textbook (Banks, 2000).

Keywords:

• reserve-production ratio
• Hotelling's hypothesis
• gas deregulation