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Gas Storage and Security of Supply in the Medium Run

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  • Chaton, Corinne
  • Creti, Anna
  • Villeneuve, Bertrand

Abstract

This paper analyzes the role of private storage in a market for a commodity (e.g. natural gas) whose supply is subject to the threat of an irreversible disruption. We focus on the medium term in which seasonality of demand and exhaustibility can be neglected. We characterize the price and inventory dynamics (accumulation, drainage and limit stocks) in a competitive equilibrium with rational expectations . We show the robustness of our results to alternative scenarios in which either adisruption has finite duration or the crisis is foreseen. During the crisis consumers may put pressure on the Government to intervene, but too severe antispeculative measures would inefficiently discourage storage. Practical solutions to this dilemma cause welfare losses that we characterize and quantify.

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File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/4808/4/MPRA_paper_11986.pdf
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Bibliographic Info

Paper provided by Université Paris-Dauphine in its series Open Access publications from Université Paris-Dauphine with number urn:hdl:123456789/4808.

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Date of creation: 2009
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Publication status: Published in Resource and Energy Economics (2009) v.31, p.24-38
Handle: RePEc:ner:dauphi:urn:hdl:123456789/4808

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Related research

Keywords: Gas Industry; Security of supply;

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  1. Devarajan, Shantayanan & Weiner, Robert J., 1989. "Dynamic policy coordination: Stockpiling for energy security," Journal of Environmental Economics and Management, Elsevier, vol. 16(1), pages 9-22, January.
  2. Creti, Anna & Villeneuve, Bertrand, 2008. "Equilibrium Storage in a Markov Economy," MPRA Paper 11944, University Library of Munich, Germany.
  3. Machiel Mulder & Gijsbert Zwart, 2006. "Market failures and government policies in gas markets," CPB Memorandum 143, CPB Netherlands Bureau for Economic Policy Analysis.
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