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Still a Petroleum Tanker of a Different Color: Enduring Obstacles to an LNG-based Global Natural Gas Spot Market

Laura T.W. Olive

Economics of Energy & Environmental Policy2026https://doi.org/10.5547/2160-5890.15.1.loliarticle
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Abstract

Unconventional natural gas production has driven North American prices down to a fraction of those in Europe for many years, separating the two largest natural gas markets. The entry of the United States as a major LNG exporter and the energy crisis in Europe invites the question of whether LNG can eliminate those price differences in a global natural gas market, as oceangoing trade does for oil markets. The relative degree of asset specificity in the infrastructure to trade natural gas or oil between regions separated by oceans provides insight into why, despite increased liquefaction capacity in the United States and soaring exports to Europe in 2022, regional price differences remain likely to persist. The fixed capital cost of LNG infrastructure is an order of magnitude greater than for crude oil. Additionally, the regulation of the natural gas industry in major markets outside of North America effectively precludes competitive entry of LNG, driving a wedge between regional gas prices. Given these constraints, LNG trade will likely remain dominated by long-term contracts instead of the spot markets that typify world oil markets.

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https://doi.org/https://doi.org/10.5547/2160-5890.15.1.loli

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@article{laura2026,
  title        = {{Still a Petroleum Tanker of a Different Color: Enduring Obstacles to an LNG-based Global Natural Gas Spot Market}},
  author       = {Laura T.W. Olive},
  journal      = {Economics of Energy & Environmental Policy},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.5547/2160-5890.15.1.loli},
}

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F · citation impact0.50 × 0.4 = 0.20
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