Bottlenecks in regional markets for natural gas transmission services

In this paper, we suggest a simple econometric procedure for identification of bottlenecks in the US natural gas pipelines network. We claim that there is a bottleneck between two nodes of the network if their spot gas prices are not co-integrated. Existence of bottlenecks is attributed to insufficient pipeline capacity between two such nodes. We find that the network is separated into three local markets: Northeast, Midwest and California.