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Title Energy policy study. Volume 11. Federal pipeline regulation
Creator/Author Berlin, B.P.
Publication Date1980 Aug 01
OSTI IdentifierOSTI ID: 5234629
Report Number(s)DOE/EIA-0201/11
Resource TypeTechnical Report
Research OrgDepartment of Energy, Washington, DC (USA). Energy Information Administration
Subject020700 -- Petroleum-- Economics, Industrial, & Business Aspects ;030600 -- Natural Gas-- Economic, Industrial, & Business Aspects ;294002 -- Energy Planning & Policy-- Petroleum ;294003 -- Energy Planning & Policy-- Natural Gas ;293000 -- Energy Planning & Policy-- Policy, Legislation, & Regulation; ;NATURAL GAS-- TRANSPORT;PETROLEUM-- TRANSPORT;PIPELINES-- DEREGULATION;PIPELINES-- REGULATIONS; ECONOMIC IMPACT;MARGINAL-COST PRICING;MONOPOLIES;NATIONAL GOVERNMENT;PRICES
Related SubjectENERGY SOURCES;FLUIDS;FOSSIL FUELS;FUEL GAS;FUELS;GAS FUELS;GASES;PRICES
Description/Abstract The technical characteristics of natural gas and petroleum pipelines are such that, in the absence of Federal regulation, each pipeline company could possibly, according to traditional economic analysis, behave as a natural monopolist.^Federal regulation of these pipelines probably has, therefore, generally resulted in slightly greater supplies of the delivered produce (at slightly lower prices) than would have occurred in the absence of those regulations.^In addition to the cases of regulation and no regulation, two alternative forms of possible Federal pipeline regulation are presented.^Specifically, regulation which would attempt to approximate a competitive solution could do so with the adoption of average cost pricing.^This would result in some efficiency losses, since, at that output, marginal cost is less than price.^To achieve maximum efficiency (i.e., maximum output for a given amount of inputs) the regulation would need to require marginal cost pricing.^But since marginal cost pricing would result in losses for the firm, a subsidy would be needed for the firm to survive.^On the other hand, regulation which would attempt to induce competition among pipelines would probably also result in efficiency losses, since pipelines competing in an area would necessrily be smaller than a more efficiently-sized monopoly; hence, the result would be higher prices and lower output than would result under the monopoly solution.^If deregulation of the pipeline industries were to occur, the petroleum pipeline industry would probably enjoy fewer competitive gains from deregulation than the gas pipeline industry would.^This would result because present oil pipeline regulations do not, unlike gas pipeline regulations, restrict entry and because oil pipeline regulations have produced unusually high rates-of-return on equity for the stockholders of those pipelines.
Country of PublicationUnited States
LanguageEnglish
FormatPages: 63
AvailabilityNTIS, PC A04/MF A01.
System Entry Date2001 May 13

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