Presentation on theme: "Natural Gas David Loomis Illinois State University."— Presentation transcript:
Natural Gas David Loomis Illinois State University
ECO 436 David Loomis OVERVIEW Wellhead pipeline City gate LDC customer direct access Few economies of scope - little vertical integration
ECO 436 David Loomis Wellhead price regulation In 1981, 12,000 field producers, all markets unconcentrated 1954 Supreme Court, Phillips Petroleum v. Wisconsin - ruled that producers were able to exact excessive prices and that Natural Gas Act of 1938 authorized FPC to regulate wellhead prices. Wellhead prices that were sold interstate were regulated since 1954
ECO 436 David Loomis Wellhead price regulation (contd) 2 tiered gas prices - interstate gas subject to Federal regulation –intrastate gas priced much higher –caused allocative distortion
ECO 436 David Loomis Wellhead price regulation (contd) Natural Gas Policy Act –old gas - dedicated to interstate commerce before NGPA continue price ceilings (amt. Of old gas declines as wells are depleted) –new gas - no price ceiling on Jan. 1, 1985 price ceilings from gradually raised
ECO 436 David Loomis Wellhead price regulation (contd) 1989 Natural Gas Wellhead Decontrol Act lifted all remaining wellhead ceiling by 1993.
ECO 436 David Loomis Price of Natural Gas Delivered to Residential Customers in IL Year$/Mcf (Nov- Apr) Percentage Increase %
ECO 436 David Loomis Price of Natural Gas per Therm for Residential Customers Company1999 (in cents/therm) CILCO61.54 Ameren-CIPS67.62 ILPower60.15 MidAmerican54.40 NICORGas43.06 PeoplesGas65.54 Ameren –UE72.05
ECO 436 David Loomis Price Spike Report Data
ECO 436 David Loomis Units of Measure BRITISH THERMAL UNIT (Btu) -- The standard measure of heat energy. It takes one Btu to raise the temperature of one pound of water by one degree Fahrenheit at sea level. For example, it takes about 2,000 Btus to make a pot of coffee. One Btu is equivalent to 252 calories, 778 foot-pounds, 1055 joules, and watt-hours. Note: In the abbreviation, only the B is capitalized.
ECO 436 David Loomis Conversions MMBtu = Million BTU (British Thermal Unit) THERM - One hundred thousand (100,000) British thermal units (1 therm = 100,000 Btu).