Western Australia's Domestic Gas Reservation Policy: The Elemental Economics*

Kelly Neill

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

Western Australia's domestic gas reservation policy nominally requires new gas export projects to supply the equivalent of 15 per cent of their exports to the domestic gas market. This export restriction suppresses the domestic price below the export netback price. A theoretical model shows that a binding reservation policy always causes a deadweight loss, and clarifies the source of this loss. Western Australia's reservation policy is estimated to cause losses with a present value of between $6.9 and $22.9 billion, depending on export netback prices.

Original languageEnglish
Pages (from-to)121-134
Number of pages14
JournalEconomic Papers
Volume36
Issue number2
DOIs
Publication statusPublished - Jun 2017

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