Order 436 is the Federal Energy Regulatory Commission's bid to convert the natural gas pipeline industry, traditionally regulated as a natural monopoly, into a semi-competitive and more efficient transportation industry. This paper analyzes the market environment into which Order 436 was introduced, reviews the background and provisions of the landmark action, and assesses its effects, particularly on the pipeline industry. The paper concludes that the Order puts many pipelines into an untenable position given the current market context and has not fully anticipated further market changes.

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