----- Original Message ----- From: "Doug Pensinger" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[email protected]> Sent: Friday, December 02, 2005 2:02 PM Subject: Re: Bitter Fruit
> Dan wrote: > > > > Let me ask you one question. When oil was at 10 dollars/barrel, how did > > that fit into the vast oil industry conspiracy to ruin the world? Is > > there something inherently wrong with folks in the oil patch that when > > it suffers through 80% drops in employment that's justice? > > How often has that happened since 2001? It hasn't. Your point is? I know that, even with the upturn lasting 5 years, it wasn't till this year that the oil patch in the US was hot enough so that service companies could recind some of their price cuts. > Look, all I'm saying is that people in the indusry have a built in bias. > People in the industry that have suffered through these downturns have a > determination to prevent them from happening in the future, exacerbaitng > their bias. People like George W. Bush. So, why would he take an action that would be most likely to cause another downturn? The best thing possible for the US oil patch is keeping Iraqi oil boycotted forever. > > My guess is you think this gaming is the core problem. My argument is > > that the core problem is the lack of a long term supply of natural gas > > for > > electricity. > > My arguement is that no matter what the core problem was or is, instead of > trying to be part of the solution, energy companies illegaly manipulated > the system and made the crisis far, far worse than it would have been. I'd like to walk through this slowly, because I would like to see where we start to diverge. I know that natural gas prices throughout most of the '90s were very low around $2.00 per thousand cubic feet. The prices were so low that, if only gas was found in a well, it wasn't worth completing. In this market, deregulation occurred. Utility companies had a ceiling on the price they could charge consumers. Sometime around 2000, the price of natural gas went up to the $3.00 range. After having been burned with the big drop in oil prices, both large and small companies were taking a cautious approach towards this price increase. At the same time, the switch from coal to natural gas was continuing....since it was far easier to meet regulations with natural gas than coal. By 2001, the price of natural gas skyrocketed...to $9.00. Companies that supplied electricity to California did not have long term contracts in place, because the price on the spot market was below long term price back in '96...and the Calf. legislature thought long term deals were a bad deal for the consumer and didn't allow them. So, they had to buy natural gas for these prices, resulting in their costs significantly outpacing their income. Companies, such as P G & E quickly rang up billions in liability. Electricity was available for purchase on the spot market, but the supply was very limited, and the price was high. At this point, very small disruptions would be enough to kick up prices significantly. I'll stop here to see where you differ. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
