Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Gottfried who wrote (84944)	1/22/2001 9:09:28 PM
From: Zeuspaul	Read Replies (1) of 95453

So, since the plants were not moved out of state <g>, do they now deliver electricity to other states? Were they shut down by the buyer? What happened to the output of the sold power plants? I don't know any details about the power plants that were sold...some may have been out of state already so it wasn't necessary to move them<g>. I know LADWP has some of its power plants in Utah. The bottom line is the power is still available. The producers are reluctant to sell to the California utilities because they don't think they will get paid. It looks like Californians had a choice between an efficient market and a stable (regulated) market. Californians chose the efficient market...musta been the in thing to do. The mistake was assuming an efficient market meant lower prices. So looking back the choice was an efficient high market price with unreliable supplies or a regulated low price and reliable power. It looks like we goofed...lured by the free market hype. I agree we have to pay for our mistakes. The question now is how do we move forward? Do we want to continue throwing $ down the efficient market hole? One disadvantage to the efficient market approach is our industry will move out in search of lower energy costs. Low cost energy is good way to encourage business. A reliable energy supply is now the consumer's responsibility...another advantage of the efficient market theory. With the implementation of an efficient market we have sacrificed low and stable prices. At least we can be secure knowing we have an efficient market...any suggestions for home energy storage...batteries? fuel cells and propane tanks? Zeuspaul From the Forbes article forbes.com Finally, deregulation has whittled away at the guarantee many customers had of a secure gas supply. The government used to force pipeline companies to hold excess inventories of gas, either through long-term contracts with producers or their own underground reserves. The result was an inefficient market but few interruptions in supply. Now the market is much more efficient. But deregulated outfits like Enron are less likely to store excess reserves in the ground. They use futures contracts and derivatives to manage their obligations; customers must fend for themselves in a shortage. "In rising markets, a merchant is not inclined to hold gas in storage," says Arthur Gelber, president of Gelber & Associates in Houston. "If Enron is holding 600 futures contracts instead of 6 billion cubic feet in storage, you can't heat your home with that."

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