Gas deregulation may include pricing and production practices related to natural gas.
Gas deregulation is a form of utility deregulation in which regulations on gas suppliers and distributors are suspended. The practice of removing regulations is known as “liberalization” and is considered by many free-market advocates to be the key to the functioning of a fully free market. With the regulations in place, the market can be restricted to an extent that some critics find unacceptable. These critics feel that regulation tends to hamper innovation in the industry.
Natural gas is sought after throughout the world as a source of energy.
Gas, in many different forms, is used in a wide range of applications. Gas deregulation can include natural gas as well as propane and other gases. One of the most common uses of gas is in the production of heat for heating, cooking and industrial processes. The gas can also be used to generate electricity, which can be used to power refrigerators, washing machines, and other appliances.
In gas regulation, the government has regulations that limit things like prices, transportation activities, etc. The stated purpose of the regulation is to keep gas prices reasonable and fair for consumers and to maintain certain safety standards in the interest of society as a whole. Gas regulation can also be used as a tool to address utility monopolies and price fixing by monitoring the gas industry so that it bears some responsibility and is expected to abide by certain rules. Regulation may also involve business practices, requiring certain disclosures from members of the gas industry, for example.
In gas deregulation, these restrictions are lifted. “Deregulation” is a bit of a misnomer, because all regulation that governs the industry is not suspended when gas deregulation occurs. Specifically, gas deregulation generally refers to the lifting of price restrictions and other barriers to market activity. Regulations, such as safety requirements and labeling, remain in place to protect consumer safety and ensure safety procedures remain consistent throughout the industry to protect gas workers, first responders, and other people who may have reason to interact with gases at work.
Energy deregulation in general became very popular in many regions of the world in the late 20th century. In some regions, deregulation actually created market problems that led to erratic supplies, skyrocketing prices, and other problems. Advocates of deregulation argued that such problems were the result of a setback and that the industry would eventually return to equilibrium, with the market self-regulating.