Very high and very volatile energy prices, coupled with the fearof what they will do to overall economic growth, were among themain reasons cited by energy analysts that energy companies of allshapes and sizes were out in front of the U.S. stock market dipover the last two days.

The declines hit E&P independents such as Coastal Corp.,which registered nearly a $10 drop Wednesday and Thursday toslightly more than $73; Anadarko Petroleum, which fell about $8 to$59.50; Exxon-Mobil, down about $5 to $88; and Chevron, off about$4 to $82 Thursday. Lower in the price range, Conoco dropped adollar to about $25.

Coastal’s merger partner, El Paso registered an $8 decline overthe two days to close just over $60 yesterday. Farther downstream,companies suffered only small price drops (Reliant) or small gains(KeySpan). Williams, with a telecommunications component, droppedabout $5 to close just over $35.

Enron, the target of rumors about less than expected earnings— which the company vigorously denied in an unprecedented pressrelease last Friday — registered a $14 drop to near $65 in thetwo days.

Among power producers, Dynegy fell just about $5 to land near$44; Calpine was down about $5 to close to $35 a share and AESdropped about $4 to end near $52.

Duke Energy bucked the trend, rising about $4 over the two daysto nearly $90.

With natural gas and oil prices at the highest level in years,the fall-off left many scratching their heads. But, thosesuper-high prices may be what has spooked the market. The commodityprices and the stocks of the companies profiting from them, whichhave risen steadily over the last six months, now have nowhere togo but down, and with the economy slowing, the drop could beprecipitous. Part of the psychology has to do with the lack ofprecedents — of being where no one has gone before.

In the natural gas market, several bidweek traders yesterdaysaid they could hardly believe themselves the high-priced dealsthey had just done, particularly at the California border. “Theseprices will bring back regulation,” one marketer said. Therealready are reform movements and lawsuits pending in Californiathat would do just that.

Another pointed to the impact on the baseload industrialmarkets, where chemical and aluminum companies are voting withtheir feet. Reports of cutbacks by other industrials weremultiplying. In California one purchaser said if gas prices wentany higher they would start to shut in the more inefficientgas-fired power generation because with the $250 cap on powerprices, there would be no margin left.

“Any company where their energy cost is a significant portion oftheir total costs has to be backing off. This is going to cut intodemand and eventually into prices.” A fall in prices couldtranslate into a loss of confidence, and lower stock prices for thecompanies that produce, transport and distribute natural gas andpower.

The altitude that energy commodity and common stock prices havereached in recent months and the fear of a decline that could bevery swift and very deep with a corresponding impact on earnings,have led some investors to take some of their oil and gas companygains off the table, analysts said. “How long can oil prices stayin the $35 range, and how low will they go?” one market watcherquestioned.

Also to blame is the general market malaise stemming from thepolitical turmoil in the U.S., sharply lower GDP growth numbersreleased by the Commerce Department Wednesday, and lowered economicexpectations around the world, which have affected the overallstock market.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.