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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: John Carragher who wrote (43172)	12/13/2003 4:32:39 PM
From: energyplay	Read Replies (3) of 74559

Hi John - Ray and the Alaron guy are right, $13 could easily happen. The California crisis also had a physical supply interruption plus higher electricty use by the dotcom economy (lots of new server farms). The supply interruprtion was not that long - under a the previous regualted system it might have pushed the price up $ 2.00 for two months. A slight (but unexpected) real shortfall, a little panic buying, then add manipulation and a lot of panic can push prices sky high. One of the small California E&P companies I follow (ROYL) sold their December gas for $17.00 mcf. They had to put out a press release because it was a material event and many people did not believe the price. Management of the company was real upset because they knew their long term industrial customers were getting killed and might not be around next year. California had about three unexpected events - lower water behind damns, higher than expect electricity use, and the pipeline issue. Nationally today, many people were expecting a warm start to the winter - most of the long range forecasts had that around September and way into middle November. Everyone knows that "winter happens" - but the forecasts did not track well with reality. Looks both the utilities and speculators were betting on lower prices. Saw a number that said the speculators had lost $650 million in November on gas contracts. Joe Bastardi of Accuweather was one of the first to have a valid forecast, he was calling for colder in November and almost everyone else still ahd warmer. *********** The price could drop in a few weeks with a burst of warm weather....but it might go sky high first. ********** Our govenment is addresing this problem by building an energy efficent Hooters resturant. That's why I'm not cynical like Ray....

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