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Because someone owning an oil fired power plant can buy all these negative priced oil futures, take actual delivery, and burn the oil to produce electricity and get paid for that.

Normally, burning oil to make electricity is uneconomic, since gas, coal, and even renewables are cheaper. Oil fired plants were sitting mostly mothballed for the last decade in most of the world, for use only in emergencies.



But they don't have the storage capacity, otherwise prices would never have gone below zero.


You don't need storage if you immediately burn the oil?


To mirror fauigerzigerk's point: The power demand is already being met by the existing system. How could you profit by burning the oil immediately for power generation?


How much can they possibly burn immediately upon delivery and which other fuel would it replace?

I don't know for sure, but my hunch is that it's insignificant in terms of extra carbon emissions.


It's true that low oil prices will encourage oil fired plants to open back up,but I'm not sure that a very short term drop is going to have much effect since spinning up and down a power plant isn't exactly a short term decision.


Most of these plants are on 7 day standby - Ie. They need to be able to reopen within 7 days in case of war or disruption to gas supply.




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