During the 1980s, several major national energy corporations began lobbying Washington to deregulate the energy business. Their claim was that the extra competition resulting from a deregulated market would benefit both businesses and consumers. Consequently, the national government began to lift controls on who was allowed to produce energy and how it was marketed and sold. However, as competition in the energy market increased, gas and energy prices began to fluctuate greatly. Over time, Enron incurred massive debts and no longer had exclusive rights to its pipelines. It needed some new and innovative business strategies.
Kenneth Lay, chairman and CEO, hired the consulting firm McKinsey & Company to assist in developing a new plan to help Enron get back on its feet. Jeffrey Skilling, a young McKinsey consultant who had a background in banking and asset and liability management, was assigned to work with Enron. He recommended that Enron create a gas bank to buy and sell gas. Skilling, who later became chief executive at Enron, recognized that Enron could capitalize on the fluctuating gas prices by acting as an intermediary and creating a futures market for buyers and sellers of gas; it would buy and sell gas to be used tomorrow at a stable price today.