Regulatory reform on the European gas market. Does it make a difference?

Abstract: The structure of the European gas market has been the subject of extensive discussion during the last decade resulting in two EU directives. A key concept in this discussion is the mandatory break up of vertically integrated gas companies, also known as unbundling. This master thesis examines several of the regulatory measures introduced in the 2003 and 2009 gas directives. A theoretical model with the aim to predict the effects of the regulatory measures is devised. This model defines the price level as the dependent variable and several of the regulatory measures as explanatory variables. With a fixed effects panel regression the model is tested. Data on the European gas market is gathered from Eurostat, the European Commission and OECD. None of the regulatory measures could be determined to have a significant effect on gas prices. The main explanatory variable was found to be the price of oil lagged on year, reaffirming a close link between the gas and oil markets.