Cardinale, Roberto;
Cardinale, Ivano;
Zupic, Ivan;
(2024)
The EU's vulnerability to gas price and supply shocks: The role of mismatches between policy beliefs and changing international gas markets.
Energy Economics
, 131
, Article 107383. 10.1016/j.eneco.2024.107383.
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Abstract
Agencies and researchers have attributed the unprecedented surge in EU gas prices to a temporary convergence of exogenous shocks, especially the post-Covid economic recovery and the war in Ukraine. This paper argues that deeper issues are also in play, which go beyond the current conjuncture: the “policy beliefs” underlying its energy policy have made the EU unable to swiftly change policy approach in the face of rapid structural changes in international gas markets. By adopting the Latent Dirichlet Allocation (LDA) model, the paper extracts thematic information from EU legislation and executive acts and shows evidence that domestic market competition still dominates the EU energy policy agenda over energy security, making the EU unable to address the recent phase of shortage in international gas markets. The paper shows how EU gas markets have changed in recent years, also as a result of EU liberalization policies, and how international markets have changed. It emerges that European markets have lost their previous advantages in terms of security of supply and stability of price, while other international importers are now able to secure greater gas volumes, making the EU increasingly vulnerable to price and supply shocks. This vulnerability is interpreted as deriving from the contractual and infrastructure flexibility that was introduced by liberalization policies to increase market competition, which proved beneficial for EU importers in the previous phase of abundance (2014–2020), but that is contributing to destabilize EU gas markets in the current phase of scarcity (2021−2023).
| Type: | Article |
|---|---|
| Title: | The EU's vulnerability to gas price and supply shocks: The role of mismatches between policy beliefs and changing international gas markets |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1016/j.eneco.2024.107383 |
| Publisher version: | http://dx.doi.org/10.1016/j.eneco.2024.107383 |
| Language: | English |
| Additional information: | © 2024 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/bync-nd/4.0/). |
| Keywords: | EU energy policy, Market liberalization, International gas markets, Natural gas prices, Energy security, Energy shocks |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10188841 |
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