Research On Price Mechanism Of Natural Gas Supply Chain Network Equilibrium

Chinese sustained economic growth and expanding energy demand promote the natural gas consumption. At the same time under the background of adjusting industrial structure and global carbon emission, expanding the scale of natural gas utilization and improving gas utilization ratio is particularly urgent in China. However, the backward gas industry and imperfect pricing system lead to the slow process of development and utilization of natural gas. At present stage, natural gas pricing in our country is cost-plus pricing under the government’s guidance. Price of natural gas is not reasonable for other alternative energy price. The price does not reflect the market value of natural gas. Natural gas price are relatively low compared with international market, which affect enterprise’s production enthusiasm. Moreover, pricing irrationality of the up, the middle and the down stream of natural gas industrial chain, led to uneven distribution of the interests of all parties, affect the development of gas industry. In fact, natural gas pricing mechanism in our country already can’t meet the requirement of natural gas industry’s development.Based on gas pricing status in our country, this paper contrasts the natural gas price with its alternative energy price, points out the deficiency of government guidance pricing system, and explains and prospects the net back method of natural gas pricing reform which based on its market value. Then, this paper, based on the perspective of the natural gas supply chain, assuming market entity is competitive rather than cooperative, analyze the behavior and the target of every subject, construct an equilibrium model of natural gas supply chain network consists of natural gas producers, retailers and consumers and derive the equilibrium conditions. Then using a numerical case verify the accuracy of the model, and discuss the change of equilibrium outcome in three different cases. Finally, take Shanghai for example, empirically analyze natural gas prices and demand in Shanghai under three kinds of situations.Through the analysis, this paper concludes that natural gas price regulation inhibits its market prices and led to the expansion of the demand for natural gas. Although the price regulation can improve consumers’ welfare to some extent, it makes the whole social welfare decreasing. The goal of natural gas pricing reform is to relax price cap regulation, so that it is decided by the market, but we must introduce competition to natural gas production, and increase the quantity of natural gas production enterprise. Only fully competition can make gas production enterprises to reduce costs and increase overall social welfare.