-----Original Message-----
From: Stanley.K.Horton@dynegy.com [mailto:Stanley.K.Horton@dynegy.com]
Sent: Tuesday, May 28, 2002 2:50 PM
To: Parks, Joe
Subject: We Don`t Buy the Falling Natural Gas Demand Story




----- Forwarded by Stanley K Horton/HOU/Dynegy on 05/28/02 02:49 PM -----
                                                                                                                                                    
                      RJ EnergyGroup                                                                                                                
                      <RJEnergygroup@ec        To:       "'RJ Customer'" <rj@rjf.com>                                                               
                      m.rjf.com>               cc:                                                                                                  
                                               Subject:  We Don`t Buy the Falling Natural Gas Demand Story                                          
                      05/28/02 10:20 AM                                                                                                             
                                                                                                                                                    
                                                                                                                                                    






 <<iEne052802b_16201.pdf>>

Raymond James Energy Stat of the Week, published 5/28/2002.

Over the past several weeks, numerous analysts' reports have suggested
there has been a massive destruction of gas demand, as gas prices have
recently moved above $3.50/mcf. We believe the foundation for many of these
reports is both poor analytical methodology and bad data. To conclude that
weather-adjusted natural gas demand has fallen by 5 to 10 bcf per day
implies a demand deterioration level similar to what we saw in early 2001,
when prices soared to near $10 per mcf. Unlike then, today's fuel-switching
incentives still favor natural gas. Secondly, there is little economic
incentive for today's industrial consumers of natural gas to shut down
plants in an improving economic environment. The current economy is very
different than the deteriorating economic environment in early 2001.


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