UK gas prices don't form in isolation - they're the result of a global system where LNG tankers move molecules across oceans, storage facilities buffer seasonal demand swings, and physical constraints create friction that simple supply-demand models miss.
This guide explains the infrastructure and economics that connect US shale production to UK power plants. You'll learn how LNG shipping works, why UK gas prices track Henry Hub (Louisiana) with a 6-8 week lag, and how traders calculate netback prices to decide whether exporting US gas to Europe is profitable. You'll see why LNG is the flexible marginal source while Norwegian pipelines provide inflexible baseload, and how charter rate volatility (which spiked 5x in 2025) can turn a profitable cargo into a loss overnight.
The guide also covers the UK's structural vulnerability: storage capacity below 2% of annual demand (versus 20% in continental Europe). You'll understand why this makes UK prices volatile, how storage arbitrage works (and why most seasonal spreads don't cover storage costs), and why NBP can decouple from TTF despite physical interconnection - a basis risk that's burned countless traders who assumed prices would converge.
You'll work through real calculations: shipping costs for Atlantic crossings, netback comparisons between European and Asian markets, and storage break-even analysis using German salt caverns. By the end, you'll see how global gas dynamics feed directly into the spark spread formulas you'll learn next.
How This Fits the Curriculum
Physical Foundations taught you why gas plants set marginal power prices. This guide shows you where gas prices come from - the global infrastructure that determines the fuel input cost. Next, you'll learn spark spreads (power minus gas minus carbon), which combine gas prices with power and carbon markets to identify profitable generation opportunities.
Prerequisites
Complete the Physical Foundations guide first. You need to understand merit order dispatch and why gas-fired plants are marginal price-setters. No prior trading experience required.
Mastery Tip
Track Henry Hub and NBP prices online or on TradingView for a month. When Henry Hub makes a significant move, set a calendar reminder for 6-8 weeks and check whether NBP followed. The lag will become intuitive, not theoretical.
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