Institutional Constraints

Abstract

The development of the West European gas industry has been constrained by interventionist, institutional and other non-market forces over the whole of the period since the discovery of the Groningen field in 1960¹. These forces have powerfully inhibited both the development of supplies and the growth of demand. They have thus. effectively prevented the industry from making as high a contribution to Western Europe’s energy needs as a non-regulated market would have permitted. The share of high price oil imports in the region’s energy supplies has thus been enhanced, while environmental problems have been exacerbated by the greater use of high sulphur alternative fuels and the over-rapid expansion of nuclear power. The adverse effects overall of the limitation on natural gas production and use are energy prices which are higher than they need have been; to the detriment of Western Europe’s general economic situation and outlook.