Oil Oligopoly

Kinder Morgan Inc. is buying El Paso Corp. for $21.2 billion. This is going to "create the largest natural-gas pipeline network in the U.S."

Now, it seems obvious that the oil industry is an oligopoly, but is that good for the U.S.? Kinder Morgan with all of its new pipeline could claim that it is difficult to get to a certain region and raise the costs an exorbitant amount. Kinder Morgan "will have 80,000 miles of pipeline and an enterprise value of $94 billion" (note: the picture is the current Kinder Morgan pipeline map) and it will become the fourth largest energy company in U.S> (Market Watch). Although, the deal isn't supposed to close until the second quarter so that leaves some time for speculation.

At least in Pennsylvania, competition in the natural gas market doesn't exist (Pittsburgh Post-Gazette) (it also seems that in general, there are hypothesis and legislature for the promotion of competition in the natural gas industry). This deals more with gas to one's home rather than oil for cars, but the idea seems similar. In addition, NaturalGas.org claims that the demand will keep on rising in the future alongside demand for other forms of energy. This increased demand, with low competition makes me a little worried. Will prices be raised to the point where gas is a luxury? Or will that happen and the market will give up on gas altogether?

In the past week, Kinder Morgan's stock price has gone up .15% (it looks way more impressive in graph form) (Daily Finance). In contrast, El Paso's stock has gone up 2.30% over the past week (Daily Finance). Maybe people are buying because they know that Kinder Morgan is going to pay $26.87 per share versus the current $19.59 per share. I think this is interesting because despite all of the interest in alternative energy, most people still expect natural gas to be a prominent energy source, at least for the time being.

What do you think should be done concerning the potential for immense power in gas companies? Should anything be done?

Oil's Cheap, but Gas Isn't

It seems they're inversely propotionally. Oil prices have hit a new low, but it looks like gas prices are going for a new high, trying to beat last year's $4 per gallon, oh my god. "The recession in America has dramatically cut demand for crude oil, and inventories are piling up. So prices for West Texas crude have fallen well below what oil costs from places like the North Sea, Saudi Arabia and South America." It's not like that's going to help us much though without building new billion dollar pipelines over the next few years while oil just continues to flip flop and frustrate people. Not to mention all of the space it would take up, the wildlife it would destroy, and the uselessness of it once we actually stop using oil, either because we've become independent of it or because we've used it all up. But maybe this'll help us get to our future goal of being a nation not dependent on oil. Hopefully things'll work out for the best, because I know that personally, I'm getting sick of having to go pump up my tank and seeing that it costs me almost $10 more than last time.