[krobbn]

"Gas costs €35 per mwh for delivery today, but €110 for a guaranteed shipment in December and €142 for one in February, once heaters turn on."

The market is in contago, if you can find a way to store the gas you can make money buying today and delivering in Dec/Jan/Feb.

You could even take delivery in December if you can find storage and sell in Feb and lock in a spread of $32 today. This is the reason you're seeing so many LNG ships outside the coast of western Europe.

[bombcar]

Isn't storage just exactly the problem? From what I understand every single possible storage tank in Europe is filled to the brim, and most if not all of the LNG ships are already there or en-route.

[thorin]

I wrote the system for National Grid UK LNG storage and trading in the early 2000s. I think they had 6 sites online now. Milford Haven was in progress I believe. Then they gradually started closing them as not required... Same with coal and nuclear plants! LNG is not so easy to store and there were a lot of safety regulations for site visits.

[bombcar]

That's always the problem - most obvious in companies but also visible with governments - anything that is for "once in a lifetime emergencies" gets ignored or downsized eventually because it's hard to explain the reasons for the costs.

[efishnc]

That sounds like fun work! How did you get in that position?

[thorin]

I was part of the research organisation which owned all of the British Gas R&D work going back into the 70s and beyond. I also maintained the software for all the high pressure gas metering sites and converted some of the code and calculations from Fortran and Basic into more supportable APIs. There was a lot of early work on GIS mapping for pipeline management as well.

[coldpie]

I got some plastic bags hanging around, who do I ring to get in on this?

[jimnotgym]

Liz Truss, the short lived prime minister of the UK closed a major gas storage facility when she was energy secretary!

[gruez]

I don't think this is correct. According to the coverage I've read, the facility in question is Rough[1] which closed in 2017. Around that time Truss was "Secretary of State for Justice" and "Secretary of State for Environment, Food and Rural Affairs". In case the latter sounds vaguely energy related, there's a separate cabinet post called "Secretary of State for Business, Energy and Industrial Strategy".

[1] https://en.wikipedia.org/wiki/Rough_(facility)

[nurblieh]

Contango! Great word. For a fun explanation, check out Planet Money’s “Negative Oil”, https://www.npr.org/2020/04/22/842095406/episode-993-negativ... .

[2Gkashmiri]

I was on hn when that happened last time. I felt like but could not convince someone to "buy" me an oil tanker for negative money, only for a short period but I could boast about "being an owner of an oil tanker once". Sigh. If only someone could help

[wcoenen]

It was the value of the contracts for delivery at a certain time and place (e.g. the "May 2020 WTI crude" contracts) that went negative, because there was no capacity to accept delivery.

Sure you could have received money by buying the (undeliverable) oil on a tanker, but then you would have been stuck paying the oil tanker lease cost (tens of thousands of USD/day) until capacity to take delivery became available, or until the tanker could be moved elsewhere with capacity.

[2Gkashmiri]

oh no. making money was not the issue. i am living on the other side of the world so its not like i could take delivery even if i wanted to but the idea was that i could "buy" the contract and sell the same within minutes/hours as the price was in the negative itself.

i would've get a receipt in my name (for whatever brief period that would've been) and i would get to boast about that..... just harmless fun thing

[dirtyid]

I assume those LNG tankers are just hanging around as "storage" waiting for the winter payoff?

[krobbn]

Exactly, you're getting paid to store the gas for future delivery.

[_glass]

Or you can use a financial instrument futures. I never bought futures, just learned about it in university. But there you agree to a future price, so akin to storing it.

[whatshisface]

If everyone agrees that the price will go up but nobody can buy and store it, the futures price will actually be higher than today's price.

[whatwherewhy]

Future is a contract with delivery in the future - exactly what this comment is taking about. The future markets for Dec/Jan/Feb have already priced in the storage problem many months ago, you can't obtain them for today's low price.

[arikrak]

Run the gas through generators and generate Bitcoin with the extra electricity, then spend it on gas futures?