Quote:
Originally Posted by ZNPaaneah
Enron's business model was predicated upon forecasting.
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To try and make this really simple, Enron was a pipeline company that delivered gas. They thought they could buy gas reserves, still in the ground that would take 20 years to pump out. They wanted to then sell the contract for 20 years of gas. And they wanted to use mark to market accounting. That means when they sold the contract they would claim the 20 years of profit at that moment.
One implication of this approach is that a fortune 500 company could not afford any changes in the law, new energy taxes, new regulations, a carbon tax, making natural gas illegal, etc. They have already written contracts for the next 20 years.
So if you thought that these were decisions that could be made by the government or by the will of the people you were wrong, the decisions concerning energy were already made by these corporations.