Sample Research Paper

Words 3,500

Enron’s principal business is energy trading and distribution. It also transacted business in a wide range of other commodities, including metals, paper, and coal, chemicals, and bandwidth capacity. Enron has a 9,000-MW global power generation portfolio, and it operates a 25,000-mile gas pipeline system in the US. The collapse of Enron was accelerated by a catastrophic loss of investor confidence following the revelation that the company had removed billions of dollars of loans and other obligations from its balance sheet by entering into various private partnership agreements with a certain equivalent. Enron’s stock price fell from US$4.14 on November 27, 2001, to US$0.36 on November 29, but the shares were formerly in decline having steadily decreased from a peak of US$90 in August 2000.

Enron began business in 1986 as a result of the merger of two natural gas companies plan on creating the first nationwide natural gas pipeline. At that time, energy production was a government-sanctioned domination.

The government regulated the construction of power plants, the rates to be charged for power, and the maximum profits energy companies could earn. That all altered after the federal government deregulated the natural gas industry in the late 1980s and the electricity industry in the 1990s.

Enron was created in 1985 through the merger of two Texan gas pipeline companies. Under Kenneth Lay’s direction, Enron took benefit of the deregulation of energy prices and privatization of state and city utilities and altered itself into an energy trader. Making use of complicated financial instruments called derivatives; Enron bought and sold units of energy. For a small down payment, Enron venture on making large profits by selling it at a more favorable price in the future.

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