Using rational expectations storage model to explain natural gas price

Natural gas is a key energy source for residential, commercial, electric power and industrial use. Residential, commercial and electric power sector consumption is primarily driven by weather conditions and displays obvious seasonal patterns while production is relatively stable throughout the year. As weather condition is uncertain and both consumption and production are inelastic in the short term, natural gas price is quite volatile especially in the heating season. Due to an imbalance between production and consumption, storage plays an important role in ensuring availability and smoothing price between low and peak consumption seasons. Storage is also a key driver of price volatility. The existing literature confirms the importance of inventory and weather conditions in determining price and its variance. Most studies to date use time series models and focus on the historical price realizations while providing little insight into how price patterns are determined by market participants’ behavior. In addition, the impact of inventory and weather variables on price volatility has not been analyzed in detail. This thesis aims to construct a model that can mimic the major market participants’ behavior and reproduce the natural gas price with mean and standard deviation patterns consistent with historical observations: higher average level and standard deviation in peak consumption season. We construct a monthly rational-expectations competitive storage model to better reflect monthly variations in price. Natural gas consumption and production are specified in a way that the current period volume is highly correlated with previous period volume so as to capture the stickiness and gradual change in natural gas markets. Imposing non-arbitrage condition, price is inter-temporally correlated. Net storage cost consists of both physical storage cost and convenience yield obtained from holding stock at hand. Normal storage level for each month is introduced to reflect the yearly cycling of natural gas inventory and is used in the convenience yield calibration. It denotes the normal storage level each month that is needed to balance seasonal demand-supply relationship. Convenience yield is high if the inventory falls below normal storage level and high convenience yield pushes up the price and decreases current consumption to accumulate more natural gas for future use. The model is solved using numerical methods because analytical solutions are not feasible. In order to validate the result, accuracy tests are conducted and the major assumptions are tested as well. The model’s approximation errors are reasonable. The model is further validated by comparing simulated price series with historical observations by using historical weather variables in the solved model. The simulated model generates prices that largely replicate the key features of historical data, including the price level, price variance, price sensitivity under unusual weather conditions and price autocorrelation. Weather conditions and total natural gas availability are the main drivers for price and price standard deviation. The model finds that in winter high heating degree days (HDD) or low inventory drives price and price volatility higher while price and its variance decrease with low HDD and high inventory. The case is similar in summer with cooling degree days (CDD) instead of HDD as the weather variable. When inventory is low, weather shocks have a larger impact on price than when inventory is high. The effect is more pronounced in winter than in summer because the supply is tighter in heating season. Using the validated competitive storage model, this thesis further assesses the potential impact of LNG export on the U.S. domestic natural gas market. Given the large pricing spread between the United States and the rest of world, along with policy promotion and the completion of LNG facilities, U.S. LNG exports are poised to expand dramatically. This study covers two major types of LNG export scenarios: exogenous fixed volume and endogenous export volume depending on the price spread between US and world prices. Four export scenarios are analyzed and compared with the benchmark scenario of no LNG export. The first two scenarios are fixed export volume with 6 bcf/day and 12 bcf/day respectively, to be consistent and comparable with an EIA 2014 report and the existing literature. One of the endogenous scenario scenarios assumes no consumption and supply growth for importing countries and the other one assume 100% increase of demand and 50% increase of supply in LNG importing countries by 2036. Because of high shipping cost and inelastic natural gas demand in importing countries, the U.S. LNG is not competitive under current market condition, if no growth is expected. The U.S. LNG export volume is very small and decreases over time. Due to small export volumes, the domestic price impact is minimal. For all scenarios analyzed in this study, the long-term price impact is less than 8%, or around $0.33 per thousand cubic feet. In the long-term, the endogenous export with growth assumption scenario shows the largest price increase compared to the no export benchmark scenario. The export level is around 12 bcf per day. The U.S. domestic price variance becomes smaller if an endogenous export sector is added while the price variance becomes higher under fixed export volume scenarios. If the LNG export is endogenously determined, when domestic price increased, LNG export decreases. This provides an additional buffer to the U.S. domestic market if there is shock to push up natural gas consumption and price. In contrast, fixed volume export makes the total natural gas consumption less responsive to price change and thus increases price variance. Most of the LNG export volumes will be satisfied by production increases instead of domestic consumption reductions in the long term. In all four scenarios analyzed in this study, production catches up gradually in response to price increase due to LNG export. In the beginning period when production is constrained by production capacity, most of the export is covered by domestic consumption reduction. In the long term, as production increase, domestic consumption recovers to similar level as in the no export scenario

The proposal and partial validation of strategies and components for developing project-oriented activities in elementary science classes in Taiwan

This study was designed to secure plausible framework for Taiwanese elementary teachers to enhance their teaching technique in science. Two major tasks were accomplished. First, Strategies and Components (SC) embraced in industrial arts projects and science activities were identified by reviewing literatures. Then, six categories were adopted to distinguish these traits. Second, the elementary teachers\u27 perspectives, in terms of importance, feasibility, and adoptability, toward these SC(s) were investigated. The second task was accomplished using self-administered questionnaire survey method to collect data related perspectives toward these SC(s). Consequently, 371 elementary teachers from the school district of interest were identified as effective sample. The teachers were also asked to respond their sex, age, educational background, type of teacher, grade level taught, years of teaching, type of school, and location of school;Positive response results from the data were collected. In other words, the teachers perceive the SC(s) as very important, slightly adoptable, and maybe feasible. Items included in topic identification were considered as most important, adoptable, and feasible; while items related to model/aids design and construction received contrary responses. None of the independent variables have influences on feasibility. However, type of school was found influencing those items as less feasible or adoptable by half of the participants. Subsidiary findings also were valuable for revision of the SC(s);Recommendations for future research are experimental study in testing effectiveness of the modified SC(s), replication of the study with different population, similar study to integrate other subject areas, and study on other factors that affect the teacher\u27s perspectives

Combustion Characteristics of Coated Nano Aluminum in Composite Propellants

The effects of coated nano-sized aluminum (Al) powder (n-Al) and micron-sized Al powder(g-Al) in propellants on the burning rate and pressure exponent have been investigated. Theresults show that the burning rates of propellants increase as the n-Al content increases, butthe burning rate pressure exponents tend to decrease. Compared with propellant containing-Al, the increments of burning rates of propellants containing n-Al powder reduce graduallywith increase in the pressure because of the differences of the combustion characteristics andignition performances of n-Al powder and g-Al powder. Single short distance photograph, scanningelectron microscopy, x-ray fluorescence analysis were used to characterise the flame image,combustion phenomena, the quenched surface image, and surface elements. A substantialdifference in combustion characteristics of n-Al powder has been found in comparison with-Al powder. In addition, oxygen-bomb combustion heat, ignition temperature, and recoveryratio of residues were measured

Strong Optical and UV Intermediate-Width Emission Lines in the Quasar SDSS J232444.80-094600.3: Dust-Free and Intermediate-Density Gas at the Skin of Dusty Torus ?

Emission lines from the broad emission line region (BELR) and the narrow emission line region (NELR) of active galactic nuclei (AGNs) are extensively studied. However, between these two regions emission lines are rarely detected. We present a detailed analysis of a quasar SDSS J232444.80-094600.3 (SDSS J2324$-$0946), which is remarkable for its strong intermediate-width emission lines (IELs) with FWHM $\approx$ 1800 \kmps. The IEL component is presented in different emission lines, including the permitted lines \lya\ $\lambda$1216, \civ\ $\lambda$1549, semiforbidden line \ciii\ $\lambda$1909, and forbidden lines \oiii\ $\lambda\lambda$4959, 5007. With the aid of photo-ionization models, we found that the IELs are produced by gas with a hydrogen density of $n_{\rm H} \sim 10^{6.2}-10^{6.3}~\rm cm^{-3}$, a distance to the central ionizing source of $R \sim 35-50$ pc, a covering factor of CF $\sim$ 6\%, and a dust-to-gas ratio of $\leq 4\%$ times of SMC. We suggest that the strong IELs of this quasar are produced by nearly dust-free and intermediate-density gas located at the skin of the dusty torus. Such strong IELs, served as a useful diagnose, can provide an avenue to study the properties of gas between the BELR and the NELR

Effect of Nitrate Ester on the Combustion Characteristics of PET/HMX -based Propellants

The effect of nitrate ester NG/TEGDN on the combustion characteristics of PET/HMX-based propellants has been experimentally investigated using of high-speed photography technique and scanning electron microscopy. It is indicated that the increase of NG/TEGDN content has little impact on the propellant burning rates at the same pressure. Furthermore, propellant can not be self-sustaining combustion at low pressure (£1 MPa). The increase of NG/TEGDN content does not affect the flame structure of propellant, but it plays an important role in condensed phase reaction zone. The flame structure of propellant is estimated. The thermal decomposition products in different combustion zones are also discussed. Scanning electron microscopy examination of quenched sample indicates that a liquified layer forms during combustion of these propellants. Numerous gas bubbles are present. Especially, the burning surface of propellant with low NG/TEGDN content shows signs of crystallization. The thickness of condensed phase reaction zone, by cross-section examination of propellant burning surface, has also been investigated. The results show that the thickness of condensed phase reaction zone increases with NG/TEGDN content increasing. These observations suggest that the condensed phase zone plays significant role in propellant combustion.Defence Science Journal, 2011, 61(3), pp.206-213, DOI:http://dx.doi.org/10.14429/dsj.61.56