Dominated until recently by long-term gas commodity contracts and costly gas shortages, the American gas market now exhibits robust and independent markets in both gas and transport capacity on the interstate network, due in part to the growth and development of a number of federal and regulatory institutions. While Europe has embarked on the development of its own institutions, great differences remain in the institutional foundation for the gas trade and pipeline capacity markets in Europe.

In this paper, presented as the keynote to the 1st CESSA Conference: Natural Gas, Nuclear Energy, and Security of Supply on 31 May 2007, NERA Senior Vice President Dr. Jeff D. Makholm examines how the growth of market and regulatory institutions has created the conditions for gas supply security in the US and what this experience may mean for Europe. Dr. Makholm argues that, more than anything else, the US experience points to the critical nature of a number of regulatory, contractual, and ownership institutions that are new or untested in Europe. The further development of these institutions ultimately will promote European gas supply security, either through competition or more meticulous and predictable regulation.