Energy Trading, the California Debacle, Why Enron was Good, and $70 Oil
Energy trading experienced meteoric growth in the 1990s and then suffered an equally spectacular collapse in 2002 after the Enron implosion and California debacle. There was no single cause but rather a confluence of factors contributed to the collapse: flawed deregulation, a cavalier approach to creditworthiness, market manipulation, and a general “bubble” like attitude towards trading volumes.
Now, the market has recovered and energy trading volumes are surpassing their peak from the 1990s. Opportunities and challenges abound. What new markets are opening up? Will we see another Enron? Should Wall Street banks be in the business of buying and running power plants? Are hedge funds driving up the price of oil? This talk will review the recent history of energy trading with a focus on North America, what we learned from the collapse, and why and how it is rebounding today.
Raj Mahajan is President of SunGard's Kiodex business unit. Mr. Mahajan joined SunGard in September of 2004 with the acquisition of Kiodex, Inc. Mr. Mahajan has also worked for Goldman, Sachs & Co. as an investment banker, commodities marketer, and principal investor. He helped launch Goldman Sachs Power, the firm's electricity trading and risk management group. He was also on the founding team that created Orion Power Holdings, a Goldman Sachs portfolio company designed to make opportunistic investments in the domestic power industry. As an undergraduate, Mr. Mahajan received the Ford Foundation's Woodrow Wilson Fellowship to study public and international affairs. He holds an MPA from Princeton University and a BA from the University of California at Berkeley.
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