Date of Award
5-2022
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Economics
Committee Chair/Advisor
Paul W. Wilson
Committee Member
Matthew S. Lewis
Committee Member
Christy Zhou
Committee Member
F. Andrew Hanssen
Abstract
My dissertation focuses on issues related to the technical efficiency of energy firms as well as the integration of U.S. natural gas markets during the era of shale gas expansion of the early 2000s. In the first chapter, I use nonparametric methods to estimate changes in efficiency and productivity of natural gas pipelines in the U.S. during the period of shale gas expansion during 2007--2018. This period, known as the Shale Revolution, saw an increase in shale gas production from less that 5 billion cubic feet per day (BCF/d) in 2007 to over 60 BCF/d in 2018. This increase in production coincides with increases in capacity and infrastructure improvements to the transportation network of natural gas pipelines. Previous research in energy economics has not examined changes in efficiency and productivity of natural gas pipelines during the Shale Revolution using modern nonparametric techniques. To guide my estimation procedure I use new nonparametric tests to make inference on the properties of the production set of pipelines. These nonparametric tests indicate that the production set for pipelines changes with production year, is convex, and does not exhibit constant returns to scale. Moreover, I find strong evidence of increases in the technical efficiency and productivity of pipelines during the period of shale gas expansion from 2007 through 2018.
In the second chapter, I use nonparametric methods to estimate changes in productivity and efficiency of major electric utilities in the U.S. during 2001--2019. Starting in 2007, an increased supply of natural gas resulted in large-scale adoption of natural gas fueled energy production as well as an overall increase in installed generating capacity. Data on major electric utilities, collected by the Federal Energy Regulatory Commission (FERC), indicate that the overall installed generating capacity of utilities increased by 13 percent during 2001--2013, with an increasing share of capacity coming from plants fueled by natural gas. However, this increase in capacity coincides with a decrease in the growth of utility-scale electricity consumption and a 12 percent decrease in utility energy generation. The evidence suggests a decline in the productivity of energy generation from electric utilities during the sample period. In addition, using modern nonparametric techniques reveals a decrease in mean technical efficiency of utilities during the period of decline in energy generation. Finally, other modern nonparametric tests show that the production frontier of electric utilities changes depending on the production year and share of natural gas fueled generating capacity a utility has out of their total capacity. This indicates that nonparametric efficiency estimates should be conditional on time and the share of natural gas fueled generating capacity.
In the third chapter, I use unit root tests to measure the degree to which geographically dispersed natural gas markets in the U.S. became integrated into the same market from 1996 through 2019. Previous papers examining natural gas market integration in earlier periods suggest that some regional natural gas markets in the U.S. became integrated into the same market during the early 1990s. This was likely the result of regulatory reform instituted by FERC in the late 1980s and early 1990s. Nonetheless, previous studies also indicate that some regions remained distinct markets, particularly the eastern and western U.S. Unit root tests of the price-gaps between geographically dispersed price hubs fail to reject that the eastern and western gas markets were distinct markets prior to the early 2000s. After 2001 a higher proportion of the east and west price-gaps became stationary, suggesting that more price hubs in each region responded to similar market shocks. This provides some evidence that the eastern and western U.S. natural gas markets may have been integrated into the same market starting in the early 2000s. Moreover, the qualitative results of this paper hold under four different unit root tests.
Recommended Citation
Cronin, Matthew, "Essays on Nonparametric Benchmarking of Energy Firms and Natural Gas Market Integration" (2022). All Dissertations. 3034.
https://open.clemson.edu/all_dissertations/3034