Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Raymond Duray who wrote (483)	6/13/2001 7:54:34 AM
From: GVTucker	Read Replies (1) \| Respond to of 1715

Raymond, this is indeed enjoyable. First: What in the world are you doing trying to buffalo me with bottom line net profit figures? Come on, brudda, neither of us are this naive. We both know that EBITDA is a more accurate reflection of a corporations performance. That is indeed correct. And EBITDA figures also support my case. The main reason that I used net income was that it was the simplest thing to pull off a spreadsheet. I'm willing to put forth some effort to support my argument on the boards here, but if there's a short cut that still makes my point, I'll take it. While I'd just as soon not copy EBIDTA off another spreadsheet that I have to print out into a post, I invite you to take a look at the cash flows. As you note, they are more reliable; they also make my point better. Your use of the most obvious, most easily manipulable and least accurate accountancy variable (net profit) to suggest that there's no manipulation that is going on is hysterically funny to me. Now, Vance, I know you are not that naive. What's your game? No game. As you stated originally, we're here to learn something and share information. Yes, net income is easily manipulated, particularly in the instance of exploration and production. In the one E&P example I cited, BR, note that cash flow has grown much faster than net income, which further supports my case. Net income in a small sample size can indeed be deceptive. That is why I used every public company that you cited as a part of the 'cabal'. While quarter to quarter things can be manipulated, the trend was consistent throughout the sample. the larger the sample size, the more that the noise of quarter to quarter manipulation can be minimized. The price at the Henry Hub has nothing in the world to do with what is going on at the Mojave tollgate, where El Paso squeezed the market. Well, it does have something to do with the price at Mojave. The one difference is that the price at the Mojave tollgate rose faster than the price at the Henry Hub. Again, though, this wasn't unique. Natural gas produced in California also rose to the same extent as the gas that passed through Mojave. BR was getting in excess of $20/mcf for their gas during the same period that the Cornell study cited that El Paso was manipulating the market. In the end, the thing that is by far most closely correlated with the price of power in California is the price of the raw material used to generate the power, natural gas. The price of power spike tenfold from its base in January. Guess what? The price of natural gas spiked tenfold. Natural gas demand has risen more in California than it has elsewhere in the country. That is because the Calfornia state government rightly believed that natural gas burned cleaner than the alternative fossil fuels, and thus created incentives for power companies to use natural gas. Alas, they didn't realize that natural gas isn't quite as fungible as crude oil. And so when they shut down offshore drilling, it wasn't so simple just to put the gas in a trillion cubic foot gas field in Israel and ship it to California. Minor detail. Funny, the same guy from Cornell that was hired by the state of California (and found market manipulation) also was hired over here in New England. He found that there was widespread manipulation here, too, but to a lesser degree. I guess he just thinks it a coincidence that the price of natural gas here also rose, but to a lesser degree.