Enron And The Natural Gas Industry - 1542 Words

Enron Background: Enron, based in Houston, Texas, was founded by Kenneth Lay as an energy and pipeline company in 1985 from the merger of two natural gas pipeline companies, Houston Natural Gas and InterNorth. The impetus for Lay to start Enron was the deregulation of the natural gas market in the mid 1980’s, which relaxed the rules on natural gas prices and allowed for more flexible agreements between natural gas producers and pipeline managers. These changes essentially eliminated the practice of using long-term contracts between producers and suppliers in the industry and allowed for prices to fluctuate more freely. The price setting model that resulted is known as â€Å"spot pricing†. This was a big advantage for Enron, which at the time owned the largest network of interstate pipeline in the US. The natural gas industry, due to the same deregulation that motivated Kenneth Lay to found Enron, was operated in a peculiar way. Natural gas suppliers relied on pipeline o perators to transport their supply to natural gas buyers and these three entities all operated independently from one another. The elimination of long-term contracts in the industry created a system in which suppliers could interrupt the delivery of natural gas to buyers without penalty, depending on and in order to manipulate natural gas prices. Enron saw an opportunity in this system that they intended to exploit. By creating a â€Å"gas bank† from suppliers, Enron was able to offer utility companies long-termShow MoreRelatedEnron And The Natural Gas Industry2792 Words   |  12 Pagesfounded Enron in July of 1985. (http://news.bbc.co.uk/hi/english/static/in_depth/business/2002/enron/timeline/1.stm) Enron started out as a pipeline company. Through strategic mergers and acquisitions, they controlled a large share of the infrastructure that moved natural gas from one place to another. Ken Lay started Enron because he felt there was great opportunity to make money in the natural gas industry. He believed that deregulation of the natural gas industry was inevitableRead MoreEnron s Impact On The Natural Gas Industry2699 Words   |  11 PagesIntroduction: Enron was founded in 1985 as a result of a merger between Houston Natural Gas and InnerNorth of Omaha. During this time period there was a series of deregulations in the utilities industry which was highly regulated at the time. Enron original business was selling natural gas. Jeff Skilling developed the idea of a â€Å"gas bank† which was the middlemen for consumers and suppliers. Enron decided that if they were to increase their growth they needed to enter other markets due to theRead MoreNorthern Natural Gas Company Management1225 Words   |  5 Pages Enron Corporation was once known as Northern Natural Gas Company, Founded in 1932 in Omaha, Nebraska as a provider of natural gas. Through its early stages, Northern Natural Gas Company was unsuccessful in their business venture. They experienced problems in persuading consumers to use natural gas to heat their homes because of fear that natural gas leaks lead to explosions. Thanks to the great depression, many people were taking the risk because of how relatively cheap natural gas was. As theRead MoreQuestions On Duty And Ethics1283 Words   |  6 PagesTRIDENT UNIVERSITY Selwyn G. Roberts Module 4 (Enron/Duty Ethics) Ethics 501 Dr. Gary B. Shelton January 28, 2016 DUTY ETHICS Duty-based ethics is a challenging concept to grasp because of the culture we currently live in. Contemplating consequences, whether good or bad is the golden rule when trying to determine the actions one should take. Our legal system is filled with do’s and don’ts which can have a direct affect on a person life. When dealing with external pressures e.g. home, work or peerRead MoreExecutive Office Of Houston Natural Gas1689 Words   |  7 Pages Enron was created in 1985 when Houston Natural Gas and InterNorth merged together. Houston Natural Gas was a utility company based in Houston, Texas before being taken over by InterNorth. InterNorth was a very large energy company based out of Omaha, Nebraska. They specialized in natural gas pipelines, but also were successful in the plastic industry, coal and petroleum exploration and production. In the beginning Kenneth Lay, who was the Chief Executive Office of Houston Natural Gas, becameRead MoreEnron And Its Innovative Growth1409 Words   |  6 PagesAuditing 301 January 7, 2017 Enron Scandal †¢ The rise of Enron and its innovative growth: After a merger in 1985, between two relatively small regional companies Houston Natural Gas Co., and InterNorth Incorporated, Enron Corp was formed. Enron Corporation became one of the biggest energy, and service company across the united states. Following this merger, Kenneth lay, who was at the time the CEO of Houston Natural Gas, also became the CEO of the newly formed Enron Corp. With his savvy skills alreadyRead MoreEnrons Accounting Fraud1304 Words   |  6 PagesINTRODUCTION: Northern Natural Gas Company (the ancestor of ENRON) was established in 1930. In 1979, Inter North Inc. bought Northern Natural Gas Company and placed it  under a new management. In the 1980s, the  United States Congress passed legislation deregulating the sale of  natural gas.  At the beginning of the 1990s, Congress passed a similar legislation targeted at the sales of electricity. These steps launched a new era in the energy market, allowing companies like ENRON to prosper. In 1985, KennethRead MoreCorporate Fraud975 Words   |  4 PagesCorporate FraudÂ…when you hear those words the first, most recent incident, many think of is The Enron Scandal. This same scandal produced the Public Company Accounting Reform and Investor Protection Act of 2002. This much needed act created the Public Company Accounting Oversight Board under the Security Exchange Commission s supervision. This board sets accounting standards and investigates Certified Public Accountants and compani es to ensure they are following the guidelines set forth. ThisRead More The Enron Scandal Essay803 Words   |  4 PagesThe Enron Scandal   Ã‚  Ã‚  Ã‚  Ã‚  Enron was established in 1930 as Northern Natural Gas Company and joined with three other companies to undertake this industry. The four companies eventually began to break apart between 1941 and 1947 as a result of a public stock offering. In 1979, Northern Natural Gas was placed under new management when it was bought by InterNorth Inc. In 1985, Kenneth Lay, CEO of Houston Natural Gas Company devised a transaction for InterNorth to purchase Houston Natural Gas. Lay wasRead MoreEnron : A Look At Ethics994 Words   |  4 PagesEnron: A Look at Ethics Enron is known worldwide for being responsible for one of the largest corporate scandals in U.S History (History.com Staff). This once well-respected corporation rose as high as number seven on Fortune magazine’s list of the top 500 U.S. companies and employed over 21,000 people (History.com Staff). However, after failed attempts of hiding their large-scale corporate fraud, corruption, and scandalous activites, the corporation was forced to file for bankruptcy which ultimately