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The global economic crisis has not spared the gas sector. Over the past year, we have moved from a tight supply and demand balance with extremely high gas prices to an easing one with plummeting gas prices. The Natural Gas Market ,Review 2009looks at various developments including the rapid increase in US unconventional gas production, new volumes of liquefied natural gas coming on stream, security of supply following the Russian-Ukraine crisis, and weakening investment in the different parts of the gas value chain in a selection of IEA countries – the United States, Canada, Spain, Norway, the Netherlands, and Turkey – as well as in non-IEA member countries in ,the Middle East, North Africa, Southeast Asia, and China.

The recently announced Energy Union by the European Commission is the most recent step in a series of developments aiming at integrating the European Union's (EU) gas markets in order to increase social welfare and security of gas supply. Based on simulations with a spatial partial equilibrium model, we analyze the changes in consumption, prices, and social welfare up to 2022 induced by the infrastructure expansions planned for this period, for the current market, as well as for three hypothetical scenarios: a halt of Russian gas deliveries to the EU during the winter period (RU-); a simultaneous doubling of available LNG (LNG+); and for Brexit, in which the United Kingdom market is isolated from the EU. In the case of the current market, the new infrastructure leads to a slight decrease of wholesale prices. Moreover, the potential of suppliers to exert market power decreases significantly, particularly in the Baltic states and Finland which are the most exposed countries today, and consumer surplus increases by 17.4% in the EU. In the RU- scenario, consumer surplus decreases across Europe, with the largest losses occurring in the Baltic states, as well as in Finland, Poland and Romania. In the LNG+ scenario, the gains in consumer surplus are primarily found in Western Europe. However, the planned infrastructure expansions distribute the gains and losses in consumer surplus more evenly over all EU member states, with the exception of Romania. In the Brexit scenario, consumer surplus decreases by up to 5.1% in the United Kingdom, 19.2% in Ireland, and 3.6% in the other EU countries. Our results allow us to distinguish three categories of projects: (i) Change in gas availability, leading to a general increase or decrease of social welfare all over the EU. The only project increasing social welfare in all scenarios in most countries is the Trans-Anatolian Gas Pipeline (TANAP); (ii) existing gas sources made available to additional countries. This leads to an increase of social welfare in the newly connected countries, while social welfare drops slightly everywhere else; (iii) projects with a marginal effect on the market. Most notably, the recently announced Turkish Stream falls into this category. Our results indicate that if all proposed infrastructure projects are realized, the EU's single market will become a reality in 2019 when Finland is interconnected to the EU markets. However, we also find that social welfare can only be increased significantly for the EU as a whole if new gas sources become accessible. At the same time, efficiency gains, albeit decreasing social welfare, help to improve the situation of consumers and decrease the dependency of the EU as a whole on external suppliers.

Natural gas is likely to become increasingly important in the future. Understanding the stochastic underpinnings of natural gas prices will be critical, both to policy analysts and to market participants. To this end, we investigate the potential presence of jumps in natural gas spot prices in the U. S. and in the U. K. We find compelling empirical evidence for the importance of jumps in both markets, though jumps appear to appear more frequently in the U. K. Some of the difference between the U.S. and U.K. jump probabilities may be due to oil prices, other factors play a role.

Even though E.U.'s natural gas markets are in a transitional stage towards liberalization, there are huge differences between North-Western and South-Eastern markets, which eventually prevent integration. Without complete integration, energy security considerations are not to be taken lightly. The dynamic character of natural gas trade allows policy-makers to implement energy policies on trade patterns, which could mitigate import dependency on a single supplier. While E.U. can never be completely independent from Russian natural gas imports, it is possible to differentiate its trading routes and sources. In the current thesis, I study in detail the E.U. natural gas market and system, and of lesser extent the markets of external suppliers, which affect the most E.U.'s gas market. I also deploy a static equilibrium model, based on the economic and trade theory, to quantify results of import dependency, in respect to production and transportation costs. The equilibrium that arises, focuses in maximizing consumers' benefits, by minimizing the final cost of natural gas import. Through non-linear programming, the minimization problem produces interesting results and insights to "whether" and "how much" an E.U. Member-State is dependent on a single supplier. It is also a simple but useful tool for any policy-maker who wants to minimize the final import costs, while increasing energy security. Furthermore, the user is able to implement energy policy scenarios based on the initial structure of the model and calculate their additional opportunity costs or benefits. The model can improve the performance of natural gas trade by computing optimal and feasible solutions, and addressing market failures, such as excessive market power, externalities, and price discrimination. However, when such market failures arise, they must be addressed through corrective regulation, but without reducing critical benefits from the markets, such as consumers' welfare.