The Supply of Storage for Natural Gas in California

Rocío Uría and Jeffrey Williams

The Energy Journal, 2007, vol. 28, issue 3, 31-50

Abstract: Do natural gas storage decisions in distant California respond to NYMEX futures price spreads? Daily data about flows into and out of storage facilities in California over 2002-2006 and daily spreads on NYMEX are used to investigate whether the net injection profile is consistent with the “supply-of-storage†curve first observed by Working for wheat. Storage decisions in California do seem to be influenced by a price signal that combines the intertemporal spread and the locational basis between California and the Henry Hub, in addition to strong seasonal and weekly cycles that determine net injections to a considerable extent. The timing and magnitude of the price response differ across storage facilities. Regulatory requirements and operational constraints also limit the response to short-lived arbitrage opportunities.

Keywords: Natural gas; supply of storage; California; NYMEX futures price; spot price (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:28:y:2007:i:3:p:31-50

DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No3-3

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