Do I Have to Re-do my Problem Sets?

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Britain's wholesale price of natural gas dipped into the negative.

Well, so much for assuming prices are positive in my optimization problems.

Stupid reality.

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Michael Giberson BBC News reports: Wholesale gas prices for immediate delivery turned negative on Tuesday as supplies surged in from the new Langeled pipeline from Norway. Britain's gas storage capacity is 96% full so firms need to offload supplies. ..... Read More

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Negative prices can arise from the oil and gas contracts used: 'take-or-pay' and 'send-or-pay' require the parties to send or take gas or pay the other party for failing to do so.

If storage is full, the receiver cannot 'take', and if pipe lines are 'down' the sender cannot 'send'.

Setting 'negative prices' is cheaper than paying full prices in compensation.


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This page contains a single entry by published on October 4, 2006 11:10 AM.

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