The History of Enron

Paper Summary:

This paper explains that Enron, which started in 1985 with the merger of Houston Natural Gas Company of Houston, Texas, and the natural gas company, InterNorth, based in Omaha, Nebraska, originally operated interstate gas pipelines but, in 1989, diversified into trading energy-related products. The author points out that, in addition to its trading in energy, Enron started trading in cellulose, pulp, paper, fertilizer, plastic, metals, and bandwidth. By 1999, Enron was involved in nearly a quarter of the energy deals worldwide. The paper relates that Enron's central strategy was to use totally the financial and derivatives in the market to acquire any commodities, from oil and natural gas to electric power generation and pipeline capacity, broadband communication, and freight capacity of modular containers, all at any price demanded. This corporate greed led to its downfall.

From the Paper:

"Enron launched the New Power Company, the first national energy service in May 2000 along with its new strategic investors IBM and America Online. The New Power Company was created to provide energy services for residential and small businesses in the US, where deregulations in the energy market were introduced. In early 2001, Jeff Skilling took over as Enron's chief executive officer from Ken Lay. In October 2001, the tables were turned again and Ken Lay returned as chief executive officer with Jeff Skilling having resigned in August. Shortly afterwards in 2002 investigations into corporate crimes and accountancy fraud were initiated on Enron leading to sharp share prices fall and the collapse of the Enron empire."

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