Natural gas deregulation created an intermediary role for Enron

The U.S. natural gas industry was once highly regulated, with the government setting prices. Limited pipeline competition gave the sector monopolistic characteristics, and government-set prices could lead to shortages or surpluses. Deregulation began in the 1970s under Carter and continued in the 1980s under Reagan. Production and end use were treated as competitive, while interstate pipelines were described as monopolistic at times and as needing federal regulation.

Enron was an integrated natural gas company, but a separation between its pipeline division and production and end-use sides created a need for an intermediary to connect producers and customers with different pricing needs. Enron Gas Bank was the company’s first business to emerge from deregulation. The industry was taking shape in the late 1980s and early 1990s and was still immature when an employee joined Enron in 1995.