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A Rough Analysis: Valuing Gas Storage

This paper studies the impact of a fire in 2006 which removed the possibility of access to the Rough gas storage facilities covering over 80% of total UK storage, at a time when major withdrawals from storage would have likely taken place. Implicitly, it shows the value of such gas storage facilities, in a country with relatively little storage, where we might therefore see a considerable impact. We find that the major effect on activity was through an increased sensitivity of supply to prices and an increased variance in this sensitivity, not through non-price rationing. Keywords: Gas storage, Rough fire, UK gas market, Event study analysis http://dx.doi.org/10.5547/01956574.33.4.6

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Energy Specializations: Natural Gas – Exploration and Production; Natural Gas – Markets and Prices; Natural Gas – Policy and Regulation

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

DOI: 10.5547/01956574.33.4.6

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Published in Volume 33, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.