Natural gas -- The changing competitive environment

Owners and senior managers don't have to be reminded that the business is getting tougher. Prices aren't behaving as expected, and they are becoming more volatile. Costs are increasing. The futures market is here to stay, not to mention swaps and options. FERC Order 636 is another complicating factor. Whether you are a producer, marketer, pipeline or an LDC, the structure of the market is changing. The answer to the following questions is quite often -- no: Is your company in a position to offer your customers the services they want? Is your company comfortable using hedges? Do you always know your level of risk? Can your company easily track daily positions and P/L and thoughtfully analyze the various business lines? While not all of the above concerns stem from increased price volatility, Order 636 and complexity resulting from the use of more sophisticated risk control instruments, many of them do. There's a cultural change occurring and companies that want to be market leaders must not just ''learn to live'' with this, but install a management process that thrives in this environment. Understanding the meaning of this goal is the focus of this paper