Futures and Oil prices

[OCinBuffalo]

while markets can get pushed around, the argument that speculators tend to make markets swing more wildly is silly.

 

if speculators make the highs higher, they must do so by buying. if they make the lows lower they must do so by selling.

 

this would make speculators losers -- they'd end up buying high and selling low.

 

now this isn't to say that speculators can't push markets, they can and do, but this is about the true economic effect of free markets.

 

free markets improve liquidity, anyone who's ever traded anything knows that a market without real liquidity either barely trades or just gets pinned in one direction on a fairly regular basis.

 

 

speculators are a good thing.

All good points, but what if all the speculators are moving in lock step = barely trading, just buying their contracts, holding them and waiting on selling what amounts to be a sure thing as long as everybody else is doing it? I mean who in their right mind would be shorting right now? And, wouldn't that cause a "pinning" in one direction especially if it has been going on for a year(s)? Regulated market or not, what if this isn't due to collusion, what if it's just what everybody is doing and no one is giving them a good reason not to?

 

I'm not sure about the "China/India demand is rising" reasoning either. For the price to go up this high wouldn't that require something on the order of 200% increase in demand over about 18 months? That seem like an awfully high amount of demand to just suddenly appear.

[pBills]

Just an FYI gas was less than 2 bucks a gallon last February. A large part of the price change was attributed to us putting oil back into the reserve. Not as much as the price increase,but some of the cost is attributed there. Since we no longer will be doing that (the bIll I believe was signed last week), it may help a little with the costs as long as the future market is somehow brought into check.

 

 

Just $2.00 a gallon last February. Wow, that made me feel better. Actually makes me more pissed off that gas prices can rise $2.00 in one year with really no reason. And of course no one doing anything except saying buy Hybrid, don't drive as much, change you driving habits. Kind of hard to do when you commute long distances.

[DC Tom]

I'm not sure about the "China/India demand is rising" reasoning either. For the price to go up this high wouldn't that require something on the order of 200% increase in demand over about 18 months? That seem like an awfully high amount of demand to just suddenly appear.

 

No, just enough to put a serious crimp in world-wide overcapacity. If worldwide consumption is running at 95% of capacity, 10% of which is China, and China's consumption increases 50%, then their overall comsumption becomes 15% of capacity, and worldwide consumption is 100% capacity...which basically means a serious spike in price since there would be no flexibility in the industry to respond to events - i.e. no capacity to deal with "risk". More than a little trading in futures isn't speculation, but is risk mitigation.

 

(Note: my China example was just that: an example, to demonstrte that it doesn't take a hell of a lot of demand to spike prices if you're running at near capacity. I have no idea what the real numbers are, nor are they relevant to demonstrating the principle.)

[pBills]

No matter what something HAS to be done. It's beyond ridiculous. Basically $2.00 increase per gallon in one year.

[DC Tom]

No matter what something HAS to be done. It's beyond ridiculous. Basically $2.00 increase per gallon in one year.

 

Well...we could have Congress pass a law forcing the Saudis to give us more of our oil they happen to be sitting on...

[ExiledInIllinois]

speculators are a good thing.

 

Then why do we have the fed (Federal Reserve) today? If they are such agood thing, they should be able to control themselves... No?

[Chef Jim]

No matter what something HAS to be done. It's beyond ridiculous. Basically $2.00 increase per gallon in one year.

 

Why don't you put your hands on your hips and stomp your feet and yell it's your right to have cheap gas.

[Steely Dan]

Is it true that the current stock prices for the main oil companies basically equate to oil being around $70.00 per barrel?

 

I had also seen a graphic showing the top five ways of drilling for oil. The hardest demanded around $60.00 per barrel. Now I understand how a sniff of trouble in the world & supply and demand can raise those prices. However, can someone explain to me how and maybe why prices have gone up so much since 2001? Think about it... people including me, used to be pretty annoyed when gas was around $2.00 a gallon. Now, we're hoping that it stops at $4.00... most likely going up $5.00 per by the end of summer. Something is really wrong here and I just can't see India and China killing the market that much. Granted they play a part, but has their part really gone up that much in the past 4-5 years?

 

Personally, and I will admit I do not know that much about this (hence questions above)... I feel as though OPEC is just completely F'ing all of us because they know that ultimately technology (hybrids, etc.) will knock the demand for oil/gas down. Might as well make some serious a cash now right?

 

At one point a few years ago OPEC thought prices were too high.

 

From the first article;

 

Seven years ago, Enron lobbyists sought to free their new experiment in electronic trading, "Enron Online," from oversight by the principle regulator of energy futures and derivatives, the Commodity Futures Trading Commission. They managed to drop a loophole into an appropriations bill that has effectively exempted all electronic over-the-counter energy commodity markets from US regulation. Before this bill was passed, crude oil was under $25 per barrel and motorists enjoyed affordable gasoline.

 

Well it was nice that Bush's friend "Kenny Boy" was able to stick that in there.

 

Enron for dummies

 

During the last year Enron played a pivotal role in writing the Bush administration’s new energy policy – a policy that deregulated energy industries while removing government oversight. They were also the largest corporate player responsible for California’s recent “energy crisis.” Ostensibly in the business of buying and selling energy on the new open market, they also regularly purchased political clout on the electoral auction block by bankrolling political campaigns on both the local and national levels, buying the affection of politicians like drunken sailors at a bordello. All the while, however, they enjoyed relative obscurity flying below the radar of the national consciousness and its media sculptors.

 

_____________________________

 

Enron essentially produces nothing. Nike buys and sells sneakers. Enron trades energy. Originally an oil pipeline company, they shed most of their bulky physical assets during the high flying 90s, transforming themselves into the ultimate weightless corporation, buying and selling anything and everything ranging from energy futures to internet bandwidth, while essentially producing almost nothing. On paper they were worth more than GM, but in reality the company held few assets other than a handful of generating plants. Enron was a paper tiger

 

_____________________________

 

Despite the personal pain and economic mayhem, Enron’s California fiasco violated no laws.* Years earlier, California, seduced by false promises of cheap electricity, adopted a Republican energy deregulation plan that opened the door for Enron and its imitators to seize control of California’s power. When the good ship Enron came crashing down, they were in the process of trying to do to the nation what they did to California. Key to their plan was a corporate accrual of political power unprecedented in American history. A quick look at George W. Bush’s White House illuminates both Enron’s power and their plans.

 

*It did violate laws. That wasn't known at the time this article was written.

 

_____________________________

 

Another former Enron Advisor, Robert Zoellick, became Bush’s Federal Trade Representative. Bush's secretary of the Army, Thomas White Jr., is a former Vice Chair of Enron, who in recent months cashed out his $50 million plus worth of Enron stock before the share price dropped from $90 to 29 cents. At the Pentagon, White argued for privatizing energy systems at military bases.

 

_____________________________

 

The list goes on. Bush’s chief advisor, Karl Rove, owned a quarter million dollars of Enron stock, with nobody knowing for sure when he cashed out. Bush’s campaign advisor, Edward Gillespie, took a half-million dollars from Enron as a lobbyist after Bush was elected. Texas Republican Senator Phil Gramm’s wife Wendy was on Enron’s board of Directors, compensated to the tune of about $1 million for her service to the corporation. Immediately before joining Enron’s board in 1993, she worked as chair of President Bush Senior’s (the Bush who was elected) Commodity Futures Trading Commission, where she fought to eliminate energy futures contracts from governmental oversight. Other Republican homies on the Enron payroll include pundit Wiliam Kristol, public opinion pollster Frank Luntz and speechwriter/talking head Peggy Noonan. Even Harvey Pitt, the head of the Securities and Exchange Commission, the federal agency in charge of policing stock transactions such as the Enron insiders’ sell-off, turns out to be part of the Enron family. Before taking of the SEC, he worked for Enron’s accounting firm, the Arthur Anderson company. That’s the same company responsible both for Enron’s “aggressive accounting practices,” and for shredding documents associated with these practices.

 

_____________________________

 

But Enron wasn’t content to simply raid the public till. More importantly, they used their influence to shape federal energy policy, opening the door for Enron to take their Californian scam to a national level. Vice President Dick Cheney, an oil man himself, met with Enron officials at least six times while drafting the Bush administration’s national energy policy.

 

 

 

Tapes show Enron employees manipulating California energy.

 

 

In one January 2001 telephone tape of an Enron trader the public utility identified as Bill Williams and a Las Vegas energy official identified only as Rich, an agreement was made to shut down a power plant providing energy to California. The shutdown was set for an afternoon of peak energy demand.

 

"This is going to be a word-of-mouth kind of thing," Mr. Williams says on the tape. "We want you guys to get a little creative and come up with a reason to go down." After agreeing to take the plant down, the Nevada official questioned the reason. "O.K., so we're just coming down for some maintenance, like a forced outage type of thing?" Rich asks. "And that's cool?"

 

"Hopefully," Mr. Williams says, before both men laugh.

 

The next day, Jan. 17, 2001, as the plant was taken out of service, the State of California called a power emergency, and rolling blackouts hit up to a half-million consumers, according to daily logs of the western power grid.

 

At the time, power plants in the greater West Coast grid were under a federal emergency order to keep their plants running.

 

_____________________________________

 

Conversations between energy traders and power plants were routinely recorded to give a record of transactions. The tapes were part of a large seizure of evidence by the F.B.I. The Snohomish County utility, which is in a court battle with Enron, obtained them through a legal action.

 

Previous tapes released by the district last summer showed Enron officials joking about how they were "stealing" more than a $1 million a day from California and fleecing "Grandma Millie" while bringing Enron record profits.

 

Other tapes released on Thursday showed Enron executives discussing their fear of going to jail for manipulating power markets in Canada and the United States. And memos showed that Enron practiced as early as 1998 to create artificial shortages and run up prices and extend the market manipulation to Canada.

 

From the very end of the "Enron for Dummies" article.

 

Enron was the ultimate parasite. They were in the process of doing to the nation what they did to California. For America to live and prosper, they had to die. No one should lament this loss. Especially not Californians, who just saw their wholesale electric rates drop by well over 20% in the wake of the Enron collapse.

 

I don't know enough about the industry so please tell me if this is a possible scenario for oil prices too? Are there laws that restrict oil prices futures from being handled differently than electricity? Is it at all possible this could be going on with gas prices?

 

I still believe gas prices will drop by at least a $.75 a gallon within six months of the next President being sworn in. If it's a Democrat even more.

[DC Tom]

At one point a few years ago OPEC thought prices were too high.

 

From the first article;

 

Seven years ago, Enron lobbyists sought to free their new experiment in electronic trading, "Enron Online," from oversight by the principle regulator of energy futures and derivatives, the Commodity Futures Trading Commission. They managed to drop a loophole into an appropriations bill that has effectively exempted all electronic over-the-counter energy commodity markets from US regulation. Before this bill was passed, crude oil was under $25 per barrel and motorists enjoyed affordable gasoline.

 

Well it was nice that Bush's friend "Kenny Boy" was able to stick that in there.

 

Enron for dummies

 

During the last year Enron played a pivotal role in writing the Bush administration’s new energy policy – a policy that deregulated energy industries while removing government oversight. They were also the largest corporate player responsible for California’s recent “energy crisis.” Ostensibly in the business of buying and selling energy on the new open market, they also regularly purchased political clout on the electoral auction block by bankrolling political campaigns on both the local and national levels, buying the affection of politicians like drunken sailors at a bordello. All the while, however, they enjoyed relative obscurity flying below the radar of the national consciousness and its media sculptors.

 

_____________________________

 

Enron essentially produces nothing. Nike buys and sells sneakers. Enron trades energy. Originally an oil pipeline company, they shed most of their bulky physical assets during the high flying 90s, transforming themselves into the ultimate weightless corporation, buying and selling anything and everything ranging from energy futures to internet bandwidth, while essentially producing almost nothing. On paper they were worth more than GM, but in reality the company held few assets other than a handful of generating plants. Enron was a paper tiger

 

_____________________________

 

Despite the personal pain and economic mayhem, Enron’s California fiasco violated no laws.* Years earlier, California, seduced by false promises of cheap electricity, adopted a Republican energy deregulation plan that opened the door for Enron and its imitators to seize control of California’s power. When the good ship Enron came crashing down, they were in the process of trying to do to the nation what they did to California. Key to their plan was a corporate accrual of political power unprecedented in American history. A quick look at George W. Bush’s White House illuminates both Enron’s power and their plans.

 

*It did violate laws. That wasn't known at the time this article was written.

 

_____________________________

 

Another former Enron Advisor, Robert Zoellick, became Bush’s Federal Trade Representative. Bush's secretary of the Army, Thomas White Jr., is a former Vice Chair of Enron, who in recent months cashed out his $50 million plus worth of Enron stock before the share price dropped from $90 to 29 cents. At the Pentagon, White argued for privatizing energy systems at military bases.

 

_____________________________

 

The list goes on. Bush’s chief advisor, Karl Rove, owned a quarter million dollars of Enron stock, with nobody knowing for sure when he cashed out. Bush’s campaign advisor, Edward Gillespie, took a half-million dollars from Enron as a lobbyist after Bush was elected. Texas Republican Senator Phil Gramm’s wife Wendy was on Enron’s board of Directors, compensated to the tune of about $1 million for her service to the corporation. Immediately before joining Enron’s board in 1993, she worked as chair of President Bush Senior’s (the Bush who was elected) Commodity Futures Trading Commission, where she fought to eliminate energy futures contracts from governmental oversight. Other Republican homies on the Enron payroll include pundit Wiliam Kristol, public opinion pollster Frank Luntz and speechwriter/talking head Peggy Noonan. Even Harvey Pitt, the head of the Securities and Exchange Commission, the federal agency in charge of policing stock transactions such as the Enron insiders’ sell-off, turns out to be part of the Enron family. Before taking of the SEC, he worked for Enron’s accounting firm, the Arthur Anderson company. That’s the same company responsible both for Enron’s “aggressive accounting practices,” and for shredding documents associated with these practices.

 

_____________________________

 

But Enron wasn’t content to simply raid the public till. More importantly, they used their influence to shape federal energy policy, opening the door for Enron to take their Californian scam to a national level. Vice President Dick Cheney, an oil man himself, met with Enron officials at least six times while drafting the Bush administration’s national energy policy.

 

 

 

Tapes show Enron employees manipulating California energy.

 

 

In one January 2001 telephone tape of an Enron trader the public utility identified as Bill Williams and a Las Vegas energy official identified only as Rich, an agreement was made to shut down a power plant providing energy to California. The shutdown was set for an afternoon of peak energy demand.

 

"This is going to be a word-of-mouth kind of thing," Mr. Williams says on the tape. "We want you guys to get a little creative and come up with a reason to go down." After agreeing to take the plant down, the Nevada official questioned the reason. "O.K., so we're just coming down for some maintenance, like a forced outage type of thing?" Rich asks. "And that's cool?"

 

"Hopefully," Mr. Williams says, before both men laugh.

 

The next day, Jan. 17, 2001, as the plant was taken out of service, the State of California called a power emergency, and rolling blackouts hit up to a half-million consumers, according to daily logs of the western power grid.

 

At the time, power plants in the greater West Coast grid were under a federal emergency order to keep their plants running.

 

_____________________________________

 

Conversations between energy traders and power plants were routinely recorded to give a record of transactions. The tapes were part of a large seizure of evidence by the F.B.I. The Snohomish County utility, which is in a court battle with Enron, obtained them through a legal action.

 

Previous tapes released by the district last summer showed Enron officials joking about how they were "stealing" more than a $1 million a day from California and fleecing "Grandma Millie" while bringing Enron record profits.

 

Other tapes released on Thursday showed Enron executives discussing their fear of going to jail for manipulating power markets in Canada and the United States. And memos showed that Enron practiced as early as 1998 to create artificial shortages and run up prices and extend the market manipulation to Canada.

 

From the very end of the "Enron for Dummies" article.

 

Enron was the ultimate parasite. They were in the process of doing to the nation what they did to California. For America to live and prosper, they had to die. No one should lament this loss. Especially not Californians, who just saw their wholesale electric rates drop by well over 20% in the wake of the Enron collapse.

 

I don't know enough about the industry so please tell me if this is a possible scenario for oil prices too? Are there laws that restrict oil prices futures from being handled differently than electricity? Is it at all possible this could be going on with gas prices?

 

I still believe gas prices will drop by at least a $.75 a gallon within six months of the next President being sworn in. If it's a Democrat even more.

 

Good God, could you have found more inaccurate sources?

 

 

By the way... "...Enron’s California fiasco violated no laws.*... *It did violate laws. That wasn't known at the time this article was written." Which laws?

[colin]

Then why do we have the fed (Federal Reserve) today? If they are such agood thing, they should be able to control themselves... No?

 

the fed is a bad thing. we have the fed because the government will do bad things if it thinks it will expand its power.

[ExiledInIllinois]

the fed is a bad thing. we have the fed because the government will do bad things if it thinks it will expand its power.

 

The fed was born out of panic... Quick google search:

 

Born Out Of Panic

[Steely Dan]

Good God, could you have found more inaccurate sources?

 

 

By the way... "...Enron’s California fiasco violated no laws.*... *It did violate laws. That wasn't known at the time this article was written." Which laws?

 

Really, inaccurate? Find me better. You are entitled to your opinion but not your own set of facts. Show me where any of that is wrong. It is your belief that conspiring to raise electric prices is legal? How about conspiracy laws?

[SD Jarhead]

Well...we could have Congress pass a law forcing the Saudis to give us more of our oil they happen to be sitting on...

 

You're right...thank God that the Dims have control of Congress so we can get some real, substantial legislation passed! Like the Farm Subsidy Bill! Nancy Pelosi Rocks!

[Dwight Drane]

Sure, there is a trading premium in there now, but not much. They started to push up distant contracts the past few weeks. Gasoline is trading at a discount to oil though. At $137.50 is $5 gasoline at the pumps, and everything just hit $4. There is lag, but even if oil settles in at about $110, that still means $4 gas for a while.

 

Supply is shrinking, but that's no big news. There could be a war premium with half the US Navy hanging out in the Middle East, but the big story is the dollar. China and Oil Central now have us on restricted credit. The question is whether or not they decide to pull the rug on the US all together. I really feel oil is just leading the pending doom for our $$$. Credit is tight and is going to get worse. The Fed is about to let a bunch of smaller and regional banks go under pretty soon because they themselves are out of jack. They can reload, but the question then becomes do we go to Jimmy Carter interest rates, or wheelbarrow to buy a loaf of bread interest rates.

 

If you've got access to cheap fixed credit, now is the time to grab it. Phase 2 of this mess should kick off by the end of summer. The Fed has done everything to delay it. They've doubled the requirements for buying gold on margin, they have taken in over a half trillion of pretty much worthless debt from the big houses, and the Feds have allowed securities to be marked at "whatever you are comfortable with". That isn't going to last. Then you get the circlejerk of higher cost for shipping and rising food prices along with grain shortage, and everyone is going to get jammed. It looks like the midwest US is getting nailed with these storms and won't be able to make corn season. I hope everyone likes tofu!

[Steely Dan]

The struggling dollar is due in part to the enormous deficit. The Republicans are of the "deficits don't matter" mindset and I think it does. They also believe a weak dollar helps exports, and it does, but it also increases the prices of imported goods which wouldn't be a real problem if we didn't import so much oil.

[TPS]

The struggling dollar is due in part to the enormous deficit. The Republicans are of the "deficits don't matter" mindset and I think it does. They also believe a weak dollar helps exports, and it does, but it also increases the prices of imported goods which wouldn't be a real problem if we didn't import so much oil.

That's not the dollar-oil connection. The majority of oil traded around the globe is priced and sold in $s. Since oil is priced in $s, a decline in the value of the $ doesn't impact the price of oil directly. What the declining value of the $ does is reduce the purchasing power of revenues earned by oil exporting countries. One way to counter that is to reduce production and increase the $ price of oil. Another way would be to switch pricing and sales of oil from the $ to the euro.

[DC Tom]

Really, inaccurate? Find me better. You are entitled to your opinion but not your own set of facts. Show me where any of that is wrong.

 

If I had the time, I would. Ironically, your set of "facts" is little more than opinion - if you could be bothered to separate the facts from the opinion in your own links, you'd understand that.

 

It is your belief that conspiring to raise electric prices is legal? How about conspiracy laws?

 

You want to argue the law with me again? Show me the conspiracy laws. You made the conjecture that, despite your "factual" links saying otherwise, Enron's market manipulation in CA was illegal. So prove it.

[TPS]

Sure, there is a trading premium in there now, but not much. They started to push up distant contracts the past few weeks. Gasoline is trading at a discount to oil though. At $137.50 is $5 gasoline at the pumps, and everything just hit $4. There is lag, but even if oil settles in at about $110, that still means $4 gas for a while.

 

Supply is shrinking, but that's no big news. There could be a war premium with half the US Navy hanging out in the Middle East, but the big story is the dollar. China and Oil Central now have us on restricted credit. The question is whether or not they decide to pull the rug on the US all together. I really feel oil is just leading the pending doom for our $$$. Credit is tight and is going to get worse. The Fed is about to let a bunch of smaller and regional banks go under pretty soon because they themselves are out of jack. They can reload, but the question then becomes do we go to Jimmy Carter interest rates, or wheelbarrow to buy a loaf of bread interest rates.

 

If you've got access to cheap fixed credit, now is the time to grab it. Phase 2 of this mess should kick off by the end of summer. The Fed has done everything to delay it. They've doubled the requirements for buying gold on margin, they have taken in over a half trillion of pretty much worthless debt from the big houses, and the Feds have allowed securities to be marked at "whatever you are comfortable with". That isn't going to last. Then you get the circlejerk of higher cost for shipping and rising food prices along with grain shortage, and everyone is going to get jammed. It looks like the midwest US is getting nailed with these storms and won't be able to make corn season. I hope everyone likes tofu!

The Fed is never "out of jack," since they supply a fiat currency. Most, if not all, of what they are doing is trying to prevent further asset deflation because that is what can transfer over to the real sector and bring the economy down. The fed can't directly cause inflation unless they started handing out money to those who spend on goods and services--that's the government's job with its tax rebate. The fed can control credit conditions (in the financial sector), but it can't make businesses and consumers borrow and spend.

[Dwight Drane]

The Fed is never "out of jack," since they supply a fiat currency. Most, if not all, of what they are doing is trying to prevent further asset deflation because that is what can transfer over to the real sector and bring the economy down. The fed can't directly cause inflation unless they started handing out money to those who spend on goods and services--that's the government's job with its tax rebate. The fed can control credit conditions (in the financial sector), but it can't make businesses and consumers borrow and spend.

 

What I mean by 'out of jack", is that they had over half a trillion in "cash securities" on their own balance sheet that have been swapped with the investment banks for worthless paper. If they want to keep doing that, they have to print for their own account, although I am sure they have been doing so behind the scenes without telling anyone since they said it was their job to stop a disaster.

 

You are correct, they can't make lenders lend or borrowers spend, so what is happening is that instead of lending, banks are holding their new found cash so they don't go under. This forces others that need a loan or want to refinance on to the sidelines or the foreclosure pit, thus devaluating mortgage securities even more and forcing more insolvency. If the Fed continues to delever the entire system, you might be left with lower prices on housing and other secured assets, but the reality is that everything else over time is going to digest that constant inflow of cash and you will see it in higher real prices of oil, thus leading to shipping, food etc. We don't make enough crap to warrant a long term weak dollar, and we can't count on Asia and the Arabs to keep bailing us out because they may pull the plug on us. I've always compared it to kissing your boss' rear even though you don't like the guy. After all those years of kissing his but, if it looks like he might be on the outs, you help kick him out the door. China smells blood. Since when is a communist country worried about starving their own people anyway?

 

In the perfect storm that has been created, there is a good chance you will see 10% interest rates, $5.00 gas, and higher unemployment all as people keep losing houses and other goodies. If you are a little old lady sitting on a pile of cash, go buy yourself a boat, a Hummer and a summer home, because almost nobody else can afford to right now.

[Steely Dan]

If I had the time, I would. Ironically, your set of "facts" is little more than opinion - if you could be bothered to separate the facts from the opinion in your own links, you'd understand that.

 

 

 

You want to argue the law with me again? Show me the conspiracy laws. You made the conjecture that, despite your "factual" links saying otherwise, Enron's market manipulation in CA was illegal. So prove it.

 

Umm, if you read the article you would have seen there were a lot of facts included in it. If you seperated the facts from opinion you'd understand that. I linked those pages because they are a concise listing of the facts.

 

As far as showing you proof it was illegal. Can you read? This is from the articles.

 

Other tapes released on Thursday showed Enron executives discussing their fear of going to jail for manipulating power markets in Canada and the United States. And memos showed that Enron practiced as early as 1998 to create artificial shortages and run up prices and extend the market manipulation to Canada.

 

Three former Enron traders have pleaded guilty to federal criminal charges of fraudulently manipulating the West Coast energy market. Enron's former chairman, Kenneth L. Lay, and former president, Jeffrey K. Skilling, are under federal indictment for fraud.

 

Why do you make me waste my time?

 

Illegal Conspiracy Alleged in Enron-Devised Trading SchemesThe Office of the Attorney General filed suit in Sacramento County Superior Court against PowerEx and Public Service Company of New Mexico (PNM), alleging for the first time that Enron-devised trading schemes used to inflate prices during the Energy Crisis – in this case "ricochet" transactions – constituted a conspiracy to restrain trade that violated California antitrust laws. During the Energy Crisis, sellers used the ricochet scheme, also known as "megawatt laundering," to evade price caps in the market operated by the California Independent System Operator (ISO). During supply shortages, ISO paid premium prices far exceeding caps for energy imported from outside the state. These sales were completed outside ISO's centralized market and were called "out of market (OOM)" transactions. Go to the ENERGY web page for more energy enforcement actions.

 

Ok Cheeto Breath here we go;

 

Here's da facts jack!!

 

 

1. They were also the largest corporate player responsible for California’s recent “energy crisis.”

 

2. On paper they were worth more than GM, but in reality the company held few assets other than a handful of generating plants. Enron was a paper tiger.

 

3. Years earlier, California, seduced by false promises of cheap electricity, adopted a Republican energy deregulation plan that opened the door for Enron and its imitators to seize control of California’s power.

 

4. Enron’s political investments paid off in spades. Enron advisor Lawrence Lindsey became George W. Bush’s economic advisor, taking an Enron energy policy proposal and incorporating it into Bush’s election platform along the way. Another former Enron Advisor, Robert Zoellick, became Bush’s Federal Trade Representative. Bush's secretary of the Army, Thomas White Jr., is a former Vice Chair of Enron, who in recent months cashed out his $50 million plus worth of Enron stock before the share price dropped from $90 to 29 cents. At the Pentagon, White argued for privatizing energy systems at military bases. Then there’s Bush’s Wacko Treasury Secretary Paul O’Neill, the former CEO of Alcoa Aluminum. His lobbying company, Vinson and Elkins, was the third largest contributor to Bush’s presidential campaign, hence the honcho position at the Treasury Department. Enron was one of Vinson and Elkins’ largest clients.

 

5. The list goes on. Bush’s chief advisor, Karl Rove, owned a quarter million dollars of Enron stock, with nobody knowing for sure when he cashed out. Bush’s campaign advisor, Edward Gillespie, took a half-million dollars from Enron as a lobbyist after Bush was elected. Texas Republican Senator Phil Gramm’s wife Wendy was on Enron’s board of Directors, compensated to the tune of about $1 million for her service to the corporation. Immediately before joining Enron’s board in 1993, she worked as chair of President Bush Senior’s (the Bush who was elected) Commodity Futures Trading Commission, where she fought to eliminate energy futures contracts from governmental oversight. Other Republican homies on the Enron payroll include pundit Wiliam Kristol, public opinion pollster Frank Luntz and speechwriter/talking head Peggy Noonan. Even Harvey Pitt, the head of the Securities and Exchange Commission, the federal agency in charge of policing stock transactions such as the Enron insiders’ sell-off, turns out to be part of the Enron family. Before taking of the SEC, he worked for Enron’s accounting firm, the Arthur Anderson company. That’s the same company responsible both for Enron’s “aggressive accounting practices,” and for shredding documents associated with these practices.

 

6. President Bush is also, by all accounts but his own, quite cozy with Enron’s former CEO, Ken Lay, the corporate captain who cashed out and bailed just as the ship was going down. Though Bush had previously identified Lay as a close friend, referring to him as “Kenny Boy,” after the Enron crash he claimed to only be a passing acquaintance, arguing that Lay supported his opponent, Ann Richards, during his 1994 gubernatorial race. In reality, Lay and Enron’s political PAC donated $12,500 to Richards’ campaign, while showering the Bush campaign with $146,500. So much for presidential credibility. Bush is Enron’s boy.

 

7. So what did Enron get for all their investments? Well for starters, the Bush “economic stimulus” plan, if passed, would have the feds cut a check to Enron for $254 million dollars – this despite the fact that they used over 600 offshore subsidiaries in a successful scheme to avoid paying any federal taxes for four out of the last five years, a period when their profits soared. But Enron wasn’t content to simply raid the public till. More importantly, they used their influence to shape federal energy policy, opening the door for Enron to take their Californian scam to a national level. Vice President Dick Cheney, an oil man himself, met with Enron officials at least six times while drafting the Bush administration’s national energy policy. The Bush administration also sat out last summer’s California energy debacle while Enron savaged the nation’s most populous state, costing California’s ratepayers billion’s of dollars while Enron’s stocks soared.

 

8. Tapes Show Enron Arranged Plant Shutdown

By Timothy Egan

The New York Times

 

Friday 04 February 2005

 

EVERETT, Wash - In the midst of the California energy troubles in early 2001, when power plants were under a federal order to deliver a full output of electricity, the Enron Corporation arranged to take a plant off-line on the same day that California was hit by rolling blackouts, according to audiotapes of company traders released here on Thursday.

 

 

In one January 2001 telephone tape of an Enron trader the public utility identified as Bill Williams and a Las Vegas energy official identified only as Rich, an agreement was made to shut down a power plant providing energy to California. The shutdown was set for an afternoon of peak energy demand.

 

"This is going to be a word-of-mouth kind of thing," Mr. Williams says on the tape. "We want you guys to get a little creative and come up with a reason to go down." After agreeing to take the plant down, the Nevada official questioned the reason. "O.K., so we're just coming down for some maintenance, like a forced outage type of thing?" Rich asks. "And that's cool?"

 

"Hopefully," Mr. Williams says, before both men laugh.

 

The next day, Jan. 17, 2001, as the plant was taken out of service, the State of California called a power emergency, and rolling blackouts hit up to a half-million consumers, according to daily logs of the western power grid.

 

Officials with the Snohomish County Public Utility District in Washington State, which released the tapes, said they believed Enron officials had taken similar measures with other power plants. This tape, they said, was proof of what was going on.

 

At the time, power plants in the greater West Coast grid were under a federal emergency order to keep their plants running.

 

 

9. Conversations between energy traders and power plants were routinely recorded to give a record of transactions. The tapes were part of a large seizure of evidence by the F.B.I. The Snohomish County utility, which is in a court battle with Enron, obtained them through a legal action.

 

10. Previous tapes released by the district last summer showed Enron officials joking about how they were "stealing" more than a $1 million a day from California and fleecing "Grandma Millie" while bringing Enron record profits.

 

11. Other tapes released on Thursday showed Enron executives discussing their fear of going to jail for manipulating power markets in Canada and the United States. And memos showed that Enron practiced as early as 1998 to create artificial shortages and run up prices and extend the market manipulation to Canada.

 

12. Three former Enron traders have pleaded guilty to federal criminal charges of fraudulently manipulating the West Coast energy market. Enron's former chairman, Kenneth L. Lay, and former president, Jeffrey K. Skilling, are under federal indictment for fraud.

 

 

13. Company officials had long denied that they illegally shut down plants to create artificial shortages. In March 2001 - two months after the recording showed how the Nevada plant was shut down- Mr. Lay called any claims of market manipulation "conspiracy theories."

 

Interesting how Mr. Lay called them conspiracy theories dontcha think?

 

You asked for a list of facts there they are chumpy!