Enron Is An Energy Trading, Electric Utilities And Natural Gas

Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price.

Enron was a publicly traded energy company formed in 1985 by Kenneth Lay when Internorth acquired Houston Natural Gas; the company, based in Houston Texas, Enron (originally entitled “EnterOn”, but was later subjected to abbreviation), worked specifically in power, natural gas, and paper and even ventured into various non-energy-based fields as they expanded, including: Internet bandwidth, risk management, and weather derivatives. Several years after the founding of the company, Enron hired a man by the name of Jeffrey Skilling, a former chemical and energy consultant, who, upon promotion, created a team of high-level administrative employees who, by using special purpose entities, lackluster reporting of finances, and unethical accounting practices, hid billions of dollars of debt from unsuccessful arrangements and ventures from stock holders and the U.S. Securities and Exchange Commission. Enron executives achieved this scheme by using a controversial accounting method entitled “mark-to-market accounting,” which in essence, assigns value to financial commodities based on their projected market values; mark-to-market accounting is the opposite of cost-based accounting which records the price of a commodity at the purchase price. As a result of this new method, Enron’s worth skyrocketed to over $70 billion at one time, only to collapse miserably several years later—ultimately costing thousands upon thousands of people their jobs, pensions, and retirements. Enron’s employees

ENRON was established back in 1985 as an interstate pipeline company following the federal deregulation of natural gas pipelines. It was born from the merger of Houston Natural Gas and Omaha based InterNorth, a Nebraska pipeline company.

The Enron corporation was an amalgamation of Houston Natural Gas and Internorth two of the largest natural gas suppliers in the United States. It was built upon the company 's ability to convince congress to deregulate the sale of natural gas through supplying electrical pieces at market prices. This allowed Enron to begin to sell power at higher prices therefore driving their revenue up. The company also began to spread its grasp out of natural gas and into a myriad of other power sources across the globe including water, pulp and paper plants. This was all done through a massive series of loopholes and massive amounts of money being funneled into Congress to lobby against regulations of such activities.

Enron Corporation was one of the largest energy trading, natural gas and Utilities Company in the world that was based in Huston, Texas. The downfall of Enron is one of the most infamous and shocking events in the financial world, and its reverberations were felt around the globe. Prior to its collapse in 2001, Enron was one of the leading companies in the U.S and considered among top 10 admired corporations and most desired places to work at. Its revenues made up US $139 to $184 billion, assets equaled $62 to $82 billion, and the number of employees reached more than 30,000 people in 20 countries around the world.

Enron could become an “energy broker” in lieu of company delivering energy with the deregulation of electrical power in 1988. “Deregulation allowed Enron to be creative – for the first time, a company that had been required to “operate within the lines” could innovate and test limits.” (Sims and Brinkmann 2003) Enron went from a company with humble beginnings that has faced difficult years to an organization “where a handful of highly paid executives were able to pocket millions…” (Sims and Brinkmann 2003) With deregulation and the use of mark-to-market accounting Enron was able to legally make millions while being unethical.

The history of Enron is described in detail in the film “The Smarted Guys in the Room”. According to the film, Enron was founded by Kenneth Lay in 1985, functioning originally as a producer and supplier of natural gas. Enron built and operated power plants and pipelines all over the United States. The company’s wealth expanded quickly due to marketing, promotional strategies and stock price. One of the important aspects noted in the film was Lay’s relationship with the Bush family. This will be described in detail later on and becomes a crucial piece of information during the California energy scandal. Enron’s traders were involved in a scandal early on in the company’s history involving the misappropriation of money and oil betting, this became known as the Valhalla scandal. Lay encouraged traders to continue these activities until the company was near bankrupt and finally the top traders involved were fired and convicted.

    When Enron got started it was an natural gas and electricity company was produced, transmitted and sold by state-regulated monopolies. Enron had used Wall Street to move energy supplies into financial instruments that could be traded online like stocks and bonds. These contracts told and  guaranteed customers a steady supply at a predictable price. (citation)Which was the lie behind it. They started losing money and getting debt, so instead of them telling the truth they had hid the losses through accounting tricks because they did not want Enron’s stock prices to go down.

Research has shown that companies with poor financial performance and financial uncertainty are more likely to commit illegal acts (Lawrence & Weber 77). After several unsuccessful attempts to make a profit through spending billions of dollars building a power plant in India and entering the bandwidth market, Enron aggregated a debt of 30 billion (Enron: The Smartest Guys in the Room). Under high pressure to generate profit and keep the stock price up, Enron controlled the power they supplied to California residents. Enron reduced the power supply by exporting supply to other states. Consequently, electricity prices were driven up, forcing Californians to pay more. Moreover, traders at Enron realized that by simply shutting down some of Enron's

Enron was the result of a merger of Houston Natural Gas and Internorth. The company benefitted from being the first mover in their market, setting an internal growth strategy at an aggressive increase in revenue of 15% per year. “It became the largest energy trader in the world, with $40 billion in revenue in 1998, $60 billion in 1999, and

Enron began by merger of two Houston pipeline companies in 1985, although as a new company Enron faced a lot of financial difficulties in the starting years, though the company was able to survive these financial problems (Enron Ethics, 2010). In 1988 the deregulation of the electrical power markets came into action and flipped the company from up to down, after deregulation company business updated from delivering energy to becoming an energy broker and soon after this Enron once a company struggling

In 2001, the world was shocked by the demise of Enron, a multibillion dollar corporation that had thousands of employees and people that had affiliations with the company including The White House itself. Because of the financial chaos and destroyed lives and reputations this catastrophe left in its path, questions arose concerning how exactly it happened, why it occurred, and who was behind it. It is essential to understand how this multibillion dollar corporation rose to power and later imploded. Enron itself was born as the result of Houston’s Natural Gas and InterNorth, a gas based pipeline company from Nebraska in 1985. In the final analysis, the conspiracy of Kenneth Lay, Jeffery Skilling, and others, including

The story of Enron begins in 1985, with the merger of two pipeline companies, orchestrated by a man named Kenneth L. Lay (Zellner & Forest, 2001). In its 15 years of existence, Enron expanded its

Enron Corporation is the largest energy-trading located in Houston, Texas. It was founded by Kenneth L. Lay in 1985. Enron has been form through the merger between Houston Natural Gas and InterNorth Incorporation and initially named it as HNG/Inter-North Incorporation, before renames it as Enteron. In 1986, the company name has been shortened to Enron Corporation. At the beginning of the operation, Enron only involved in the transmission and distribution of electricity and gas throughout the United States. After that, Enron has expanded the business to information and communication, and machine metal industry. The company has providing services and products that related to natural gas, oil, broadband, pulp and paper, water as well as electricity and has been distributed it worldwide. Besides that, Enron involved in developed, created, and operated power plants and pipelines. In 2000, the annual revenue has been reach $100 billion and it has lifted Enron as the seventh largest natural gas pipeline system in the US and sixth largest energy company in the world. Enron has acquires 41 companies and has been considered as the most innovative company for six consecutive years. However, due to fraud scandals that involving its accounting firm which is Arthur Andersen and Enron’s managements, Enron has been announces bankrupt in 2001.

Most of the world has heard of Enron, the American, mega-energy company that “cooked their books” ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it from happening again?