Posted on 08/19/2003 7:51:15 AM PDT by new cruelty
It wasn't a personal attack. It was a retort to your joy at leaving Texas and moving to New York.
Best start chopping that wood now.
If you are dead certain convinced that natural gas prices are rising faster than most people anticipate, then purchase some futures contracts to a) hedge the price increase and b) profit handsomely. Here is a historical chart of the closing price of NYMEX Natural Gas contracts. Here is the Energy Information Administration's weekly report. Some history on the NYMEX contracts; from this page, you can also click around for all contracts, current open interest on each contract, and closing prices. A rise is indicated, but not "triple". If you are correct, and put your money where your convictions lay, you would walk away an extremely wealthy individual.
I've learned to respect the futures markets. They tend to be fairly accurate price discrimination tools. Not perfect, of course. But what you are linking to is not positing some outlier event, which is what these markets are relatively poor at accomodating, but structural issues, which is exactly the type of issues these markets tend to price in fairly accurately. Please share any information you have that indicates a 3X price increase is dialed in, I just don't see the evidence.
Take your chart back 3 years. Now show me another energy source that had even 70% of the average increase. BTW I have made some very good money from Natural Gas Futures. I've lost a little now and then, but I've kept far more than I've lost. This problem keeps getting worse. Go look at the spot market for winters between 94 and 96. These prices drove some new pipeline building (the industry in which I work). The US seems to only respond to crisis.
Since 1987, there has been a strong push (and a good one I think) to move new electric generation to using Natural Gas for lower emissions and lesser dependence on foreign oil. At the same time, environmentalist have been shutting us out of our own natural gas resources. An forced increased demand and a forced decreased supply result in the current pricing.
Perhaps over the course of the next 4-5 years, if the Fed fails to contain the incipient price inflation that is the unhappy product of their meddling (I lean pretty far towards the Austrian school). I actually think that might happen. But this winter like TexasCajun thinks might happen, and to which you responded without denying the claim? That would imply the sudden breakdown of supplies. Wouldn't the 300% spike in March be attributable to Persian Gulf II jitters? You're saying then that we will have an event of similar scope and scale affecting supplies, but on a more secular timeline? Wouldn't low inventories be addressed by normal market pressures and replenished as suppliers competed to bring increasingly larger quantities of high-priced supplies to market?
Congrats on your astute trades. The futures market is too rich for my blood; violates my rule of not risking more than 2% of capital on any single play. Maybe in a few more years though, after I have socked away considerably more, which is why I'm following the market now.
I THINK this is where FirstEnergy has failed ... AEP (American Electric Power) initiated a MAJOR upgrade of their 'protection systems' starting in about 1998 using "Cooper Power Systems' new Edison® Pro relays" as detailed here The Line, December 1997, AEP?s Development of a Substation Integration and Automation System.
MAJOR inprovements in sensing line conditions and power flow along with positive/assured breaker control probably saved them (they didn't collapse on August 14th).
The Edison® Pro series of relays also has bult-in logging of events including waveform capture (oscillographic recording) - I'll be interested to see what this shows leading up to the Aug 14 collapse.
FOR the record ... from the NERC "2003 Summer Assessment" report concerning ERCOT -
- excerpt:
2003 Summer AssessmentThe "SPP" region is located to the east, north and north west of Texas ... I don't know where exactly the 'DC lines' are.
North American Electric Reliability CouncilInterregional transmission transfer capability [HV inter-region Transmission lines] is limited to two DC ties ['ties' are lines that connect different regions] with SPP [Southwest Power Pool] that have a total capability of 820 MW.
ERCOT does not expect to require external assistance from those ties to meet the projected summer peak.
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