A recent article published by The Los Angeles Times explained how a company can profit by our problems. Enron Corporation is currently under investigation for accounting fraud, but are now being investigated for conspiring blackouts to make a profit. As we learn in economics, consumers will pay more for a scarce product than if it was overly-abundant. Enron traders figured they could use this economic principle to their advantage.
Enron traders and others were captured discussing in e-mail messages and telephone conversations how they could profit from California's blackouts. Enron employees also suggested that their plans to exploit Western energy markets predated the meltdown of 2000 and 2001, which brought record electricity prices and emergency blackouts. Earlier this week, staff of the Federal Energy Regulatory Commission recommended that Enron return almost $1.7 billion in profit gained through improper energy trading dating back to 1997. Some critics say that this isn't a big enough penalty and that Enron should be charged with more. I personally agree with the critics, we need to make sure something like this doesn't happen again. Especially if it is something as important as electricity. I am curious to what other business students think, should the penalty have been harsher?