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Pastimes : The California Energy Crisis - Information & Forum -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (468)	6/12/2001 4:24:33 PM
From: GVTucker	Read Replies (1) \| Respond to of 1715

Once again, the key point of the market manipulation proponents has a basic flaw: the profits of the 'cabal' that everyone rails against are not up significantly right now. Look at the public companies that you cite as the supposed culprits: Quarter Profit/<Loss> WMB 1Q99 53mm 2Q99 18mm 3Q99 28mm 4Q99 122mm 1Q00 100mm 2Q00 352mm 3Q00 121mm 4Q00 <48mm> 1Q01 199mm ENE 1Q99 122mm 2Q99 222mm 3Q99 290mm 4Q99 259mm 1Q00 338mm 2Q00 289mm 3Q00 292mm 4Q00 60mm 1Q01 425mm EPG 1Q99 <154mm> 2Q99 38mm 3Q99 39mm 4Q99 <178mm> 1Q00 428mm 2Q00 134mm 3Q00 137mm 4Q00 127mm 1Q01 <400mm> DUK 1Q99 967mm 2Q99 288mm 3Q99 441mm 4Q99 <189mm> 1Q00 393mm 2Q00 329mm 3Q00 770mm 4Q00 284mm 1Q01 458mm REI 1Q99 <200mm> 2Q99 89mm 3Q99 1705mm 4Q99 <35mm> 1Q00 147mm 2Q00 237mm 3Q00 403mm 4Q00 <285mm> 1Q01 276mm MIR 1Q99 N/A 2Q99 N/A 3Q99 N/A 4Q99 N/A 1Q00 101mm 2Q00 93mm 3Q00 98mm 4Q00 67mm 1Q01 180mm There isn't a lot of correlation with the onset of the California electricity crisis here. About the only thing that is pretty closely related is ironically the 4Q of 2000, when the electricity crisis started to get really bad. But instead of making outsized profits in that quarter, profits for these companies were actually down, to the point that many lost money. These companies got surprised by the sharp rise in natural gas just like the rest of California did, and they had to pay for it. Now examine who I think is the culprit (although I'd say that the term 'culprit' is a misnomer, because there really isn't anyone that is truly guilty here): the price of natural gas. As an added bonus, I've market the profits of Burlington Resources, the main beneficiary of this price rise. Natural gas price Quarter Profit/<Loss> $/mcf BR 1Q99 0mm 2.01 2Q99 24mm 2.39 3Q99 61mm 2.74 4Q99 <84mm> 2.33 1Q00 77mm 2.95 2Q00 94mm 4.48 3Q00 200mm 5.19 4Q00 304mm 9.78 1Q01 336mm 5.03 As the price of natural gas rose, BR's profits rose (particularly when ill timed hedges ran off), and the state of California suffered. Also note that the natural gas price is for the Henry Hub. Natural gas prices in California rose much more, not because of any manipulation, but because supply declined and demand rose. While conspiracy makes for fun speculation, the facts tell me that there is a much simpler cause--supply and demand.