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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Tommaso who wrote (19554)	3/3/2003 11:38:23 PM
From: jim_p	Read Replies (1) of 206297

Tommaso, If you don't understand the business I suggest you try another sector. Back in the 70's we had a two tier system, interstate and intrastate. Interstate was regulated and the prices were kept artificially low and intrastate was unregulated and the prices fluctuated with the market. Back in the 70's we didn't have hedging and marketing. When you drilled a well you dedicated the production to a pipeline in your area under a long term contract, or for the life of the well/field. Most of the contracts were for a fixed price and gave the banks the same comfort that hedging does today. Pipelines didn't care what they paid for the gas because they were all regulated and they got a guarantied rate of return on every dollar they spent. When the rules changes, the pipelines were all basically insolvent and they spent years settling up on all the bad long term contracts they has signed. At the peak of that cycle, most of the contracts that were signed were in the $8-10.00 range. As a not so wise arrogant poster once stated on this board, "it's always sad to discover such fundamental ignorance on these threads" I tend to agree with your statement.

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