Introducing distances between commodity markets: the case of the US and UK natural gas

The goal of the paper is twofold: first to present the energy markets in 2015 after the revolution of shale oil and shale gas; secondly investigate whether the two major gas markets, the US and the UK, are integrated at a time when natural gas is a much preferred source of electricity compared to coal, in particular in feeding the ‘peakers’ providing electricity that complements solar, wind and other intermittent renewables. Introducing the novel concept of distances between two commodity markets through quantities accounting for fundamental financial economic indicators, our conclusion is negative, illuminating the importance of transportation costs yet in the case of natural gas