A Model for The Study of the Natural Gas Storage Effect on the Price Volatilities

Natural Gas is one of the energy resources with the continuous trading in the international markets and storage facilities are used in the time of shortage crisis. In this paper, considering the general conditions of natural gas markets, we provide an appropriate model to study the effect of gas storage on the natural gas price volatilities in the competitive and monopolistic markets. First, we formulate our model in a general structure and then modify it regarding the assumptions for competitive and monopolistic markets. For solution of the problem we use the stochastic dynamic programming model. The results of the numerical example solution in this model show that in both conditions, competitive and monopoly markets, our model is compatible with the philosophy of gas storage with the aim of smoothing the price and in a competitive market; it is stronger than a monopoly one.