Professor Matthew E. Oliver has coauthored a short, non-technical article with Charles F. Mason and David Finnoff of the University of Wyoming that is currently featured in the First Quarter 2014 edition of IAEE Energy Forum, a quarterly newsletter published by the International Association for Energy Economics (IAEE).  The article, entitled “Natural Gas Expansion and the Cost of Congestion”, is based on Professor Oliver’s dissertation research at the University of Wyoming.  It reports that

“…predicted increases in production and demand for natural gas over the coming decades will likely result in persistently congested pipeline routes.  As pipeline capacity between two hubs becomes scarce, rents are generated as a wedge is driven between spot prices at the hubs.  [The authors] quantify this wedge, as it measures the cost of congestion to natural gas market participants. Under current pipeline regulation, the scarcity rents are diverted away from the pipeline owner to non-pipeline owners of firm capacity. The diversion weakens the incentive for capacity expansion, and compounds the congestion problem.”

The article may be accessed using the following link: http://www.iaee.org/en/publications/newsletterdl.aspx?id=224.