“…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.