Just do a google search for "Enron Loophole" if you want to see why gas prices are all over the place.
Here is a hint, taken straight from the 2001 presidential energy policy (regarding Natural Gas, which is not as dependent upon global demand, thus a better indicator of regional pricing structures):
Quote:
Eighty-five percent of total U.S. natural gas consumption is produced domestically. The import share of consumption rose from 5 percent in 1987 to 15 percent in 2000, and net imports have comprised more than 50 percent of the growth in gas demand since 1990. Canada, with very large gas supplies and easy pipe line access to the lower 48 states, accounts for nearly all U.S. natural gas imports. Unlike oil, almost all natural gas is produced and sold within the same region. Therefore, prices are determined by regional, rather than global, markets.
In 2000, natural gas prices moved sharply higher after fifteen years of generally flat prices. Futures prices surged by 320 per cent in 2000 to an all-time high of $9.98 per million Btus in late December 2000--nearly five times higher than the $2.05 per million Btu average from 1991 to 1999. While prices have declined since the beginning of 2001, they remain much higher than recent levels.
Source: 2001 Presidential Energy Policy
So, after 15 years of fairly flat prices, they rose by 320% in a single year, even though demand for natural gas only rose by 5% between 1987 to 2000. Guess what year the enron loophole was enacted.
Cheers,
Brad
