Article at a glance:

Volatile gas

Who will thrive as Europe deregulates its energy markets? Traditional analysis and past experience show that deregulation usually redistributes wealth from upstream energy players to distributors in the middle (by way of lower producer prices) and to consumers (by way of lower retail prices). An analytical model from McKinsey shows that the effects of deregulation may be considerably different.

The take-away

In contrast to expectations, Europe's natural-gas producers are set to do well in the postderegulation era, but wholesalers, transmission companies, and retailers will see their margins squeezed as regulation and fierce competition bring lower end-user prices.