Arbitraging

Second quarter physical gas sales volumes showed large cracks beginning to form in the foundation of the energy merchant business. The credit and liquidity crisis was growing rapidly during the quarter and the effects of the regulatory investigation into round-trip trading had taken hold. While there still were large volume increases compared to the previous year’s second quarter (a 38 Bcf/d increase for the top 20), an estimated 10.7 Bcf/d decline in volumes appeared compared to the first quarter of this year. All signs currently point to much greater declines as the year progresses.