Wednesday, April 15, 2009
Not Robbing Peter to Pay Paul
So the Democrats planned to raid the reserves of the quasi Governmental workers' compensation insurance provider, called Pinnacol Assurance. The fund was fat with income from overcharged businesses (the 1991 changes in the workers' comp law and replacement of most of the Administrative Law Judges from the earlier era have caused awards in Workers' Comp to plummet, but the premiums of the insurance, well, not so much). It was a very tempting target. And to be fair, if our spending on education is below a certain point, we lose forever some considerable federal funding; so you can see some rational motive to our ever more desperate governor's plans.
Now they have backed off that plan at the same time vowing some pretty serious repercussions to Pinnacol for denying them the use of the extra money to get the fed money. We'll see if anything comes of the threat.
On average, Natural Gas sells at the wellhead in Colorado at a $1.50 discount from NYMEX prices. Gas from larger deposits such as the Haynesville and Barnett shale sell about at par. Gas from the Marcellus Shale in PA sells for a $.50 premium to NYMEX. SO: there is already a large hurdle in the production of natural gas from the Colorado. What made Colorado production worthwhile in the past was a combination of two things 1:lower drilling costs (no longer exists) and 2: lack of supply elsewhere (no longer exists). So, why any gas company would want to produce at a 1.50- 2.00 disadvantage (50% at current prices) is a question Coloradans need to ask themselves, and the Governor.