Liquidity Issues In the U.S. Natural Gas Market: Part 1 of 2
By Gary Mahrenholz, Ph.D., Economist, Office of Enforcement’s Division of Energy Market Oversight, U.S. Federal Energy Regulatory Commission and Vincent Kaminski, Ph.D., Professor in the Practice of Energy Management, Jesse H. Jones Graduate School of Business, Rice University and Member of the JPMCC’s Research Council at the University of Colorado Denver Business School
This paper is the first in a two-part series. In the current paper, the authors review the definition of liquidity, its importance to market practitioners and policymakers and discuss different measures of market liquidity. In the second part of this series, which will be included in the next issue of the GCARD, the authors will review the unique features of the U.S. natural gas market and how price formation occurs for the various types of natural gas products. This paper will also provide an assessment of liquidity in the U.S. natural gas market.
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