The impact of the North American shale gas technology on the US’ energy security: the case of natural gas

Abstract

Energy security is sensitive to the behavioural characteristics of resource trade, especially for the US as the world’s largest energy-consuming economy. This paper applies the Markov switching model and dynamic network connectedness measures of Diebold-Yilmaz to explore the impact of the North American shale gas technology on behavioural regimes and spillover effects of natural gas trade cycles, regarding the US’ energy security. The findings indicate asymmetric and time-varying behaviour of the US’ energy security pre- and post-the revolution. Specifically, it seems that overall interaction between substitution- and scale effect of the shale gas revolution through the gravity theory develops the US’ energy security as shocks occur in the energy-trading process. Therefore, the alternating analysis of behavioural regimes and spillover effects, through potential and actual trade links in world natural gas trade networks, is essential to develop availability, affordability, accessibility as well as acceptability dimensions of energy security.

Keywords

• energy security
• asymmetric behaviour
• natural gas trade
• markov switching model
• spillover effects