Effects of Natural Gas Storage on Gas Price Forecasts

by James S. Garces, Southern California Edison Co, S El Monte, United States,
Thanos Trezos, Southern California Edison Co, S El Monte, United States,

Document Type: Proceeding Paper

Part of: Energy in the 90's


This paper explores the effects of natural gas storage on short-term gas price forecasts. At the Southern California Edison Company (Edison), the gas price forecast incorporates a multitude of variables. The variables represent, among other factors, gas and oil consumption, oil prices, and pipeline transportation tariffs. Not until recently has natural gas storage emerged as a significant issue. Interstate pipeline capacity constraints and the uncertain deliverability of gas from the Local Distribution Companies (LDCs) to Edison increased the necessity for assessing storage requirements. Within this framework, a linear programming model is developed to be used as an analytical tool in a multi-dimensional study to determine Edison's requirements for storage of natural gas. Natural gas storage is then incorporated as a factor in the short-term gas price forecasting algorithm. Preliminary results indicate that by using natural gas storage as a causal variable, the final gas price forecasts can decrease by as much as 5% over the forecast period when all other variables are controlled.

Subject Headings: Non-renewable energy | Natural gas | Forecasting | Pricing | Energy storage | Gas pipelines | Oil pipelines | California | United States

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