He clearly thinks Californians should be thanking Enron, not castigating it, for its role in trying to push open the state’s power markets. "We’re on the side of angels," he says. "We’re taking on the entrenched monopolies. In every business we’ve been in, we’re the good guys." Enron President Jeffrey Skilling, Business Week 2-12-01

Have you ever wondered what prompts President Bush to ignore the California energy crisis? Have you ever questioned from whom he was receiving counsel from on the matter? The answer to both of these questions is simply–Texas.

The President’s ear on energy matters belongs to gentleman Texan, Kenneth Lay, chairman of Houston-based Enron, the nation’s largest energy merchant and a key player in California’s current energy debacle.

Enron is one of those "out-of-state companies" that controls energy generation in the state of California. They are also referred to as one of those "out-of-state companies now under investigation."

Mr. Lay is a hard-core free marketeer and a Big Time Republican. Lay is a "generational" Bush family friend and advisor, first to Papa Bush and subsequently to mini-bush (Bush II — The Vendetta, "W"). In the days when all of mini-B’s time was spent beer-goggled, Lay was a key backer of the first President Bush, hiring Secretary of State James Baker and Commerce Secretary Robert Mosbacher after the ’92 defeat.

In "W" history, Lay served as chairman of the then Gov. Bush’s Business council (fought for Bush’s state education reforms, litigation curbs, tax cuts). Enron was Bush’s lead patron in Austin, donating more than $550,000 to the governor. Lay was one of Bush’s 212 "pioneers," raising more than $100,000. Enron donated $250,000 for the Republican national convention and was the campaign’s top supplier of corporate jets. Lay sent $5,000 to the Florida recount legal fund and $100,000 to the inaugural committee.

If these donations impress you–totaling over $1,000,000–they should, because most of them are maximums. So when you wonder, "What is our president thinking?" You should really be asking yourself, "What is Kenneth Lay thinking?"

You can also ask, "Well, what is James Baker thinking?" You might remember him from the Florida recount debacle. Previously an Enron employee, Mr. Baker now serves on the board of directors for Reliant Energy, another "out-of-state" power player from Texas, and key donator to the Bush cause.

I have just presented a few facts (freely available to the public). Draw your own conclusions. I already know there is a conflict of interest here.

Currently, Enron is doing great; profits were up 42% last year. Stock has gone up about 175% in the past two years on the hope that the company can push for further energy deregulation, California-style, nationally and globally in places like India and Japan.

They are also are being sued by numerous consumer groups, municipal water districts, and the city of San Francisco for alleged market manipulation.

Not to be outdone by the electricity generators, key players in the state’s natural gas market have also been up to chicanery of their own. In investigations being pursued by California state officials, several gas pipeline firms–El Paso Natural Gas, Southern California, San Diego Gas & Electric–are accused of collusion and market manipulation.

Natural gas is a key component of California’s "energy crisis" due to the fact that over 90% of the state’s power plants are fired by natural gas. Thus if the price of natural gas goes up, the price of power soon follows.

Suspicions have been raised about the market conditions of natural gas in California due to the fact that when gas prices tripled across the nation this past winter, they skyrocketed twentyfold in California (from about $3 per million British thermal units to nearly $60 per million BTU).

State officials and antitrust attorneys lay most of the blame for this price spike on energy giant El Paso. Based in Houston, Texas, El Paso is one of the most powerful oil and gas companies in the United States, owning the largest network of interstate pipelines.

One of the accusations against El Paso is that it illegally auctioned off about 40% of a key pipeline’s capacity to one of its own trading arms, El Paso Merchant. By giving a subsidiary the ability to hoard pipeline space during critical periods, El Paso Merchant was in the position to drive up prices in the spot market for natural gas as power producers faced no choice but to pay the higher prices in order to generate electricity.

Beyond just one pipeline, El Paso is under investigation for conspiring with other pipeline companies to manipulate the price of natural gas by agreeing to kill new pipeline projects that would have brought ample supplies of cheaper natural gas.

Investigators allege that executives from El Paso, California Gas, and San Diego Gas met secretly in a Phoenix hotel room, where they ended plans for new pipelines and agreed to get out of each other’s way by breaking the state into private zones of non-competition. One executive penned the meeting’s purpose as "Opportunities Resulting from [California] Electricity Industry Restructuring." El Paso’s actions are even more questionable since it owns about 25 "alternative" power-generating plants that sell power to the utilities. That gives El Paso an additional incentive to manipulate gas prices by increasing the price of gas and thus electric power through the state overall; any increase in energy price benefits El Paso enormously, since an "alternative" plant does not run off of gas.

Defending themselves, El Paso claims, "(the) primary cause of the volatility…is (that) demand for electrical power has outstripped supply." A Public Utilities Commission attorney, however, states that high gas prices "cannot be attributed to the cost of gas but the ability of El Paso to exercise market power and manipulate prices." The FERC and the President continue to ignore these corporate abuses.