When I look into my crystal ball, I see an impending energy crisis. This will happen because of the difficulty involved in pricing, measuring, and managing the risk of energy contracts, coupled with the government's obligation to keep utilities afloat. Anyone who knows the energy market knows energy derivatives are impossible to value. Hardly any historical data exists. What little there is indicates prices are anything but lognormal.
Energy derivatives are also the most complex instruments traded.
Contracts with variable quantities at fixed prices, others with fixed quantities at variable prices, still others with delivery of fixed amounts, but with delivery taking place any time the buyer wants, are largely unique to energy. And since demand for energy is not just a function of price, but also of how much energy one needs to run a business or to be comfortable at home, valuation assuming rational exercise is an irrational assumption. This inherent illiquidity combined with complex relationships among oil, gas, coal, hydro, nuclear and electricity, not to mention predicting the weather many years out, makes valuation of energy derivatives a daunting task. Big blowups are bound to happen at places that don't understand the risks. The government won't allow a community's energy supplier to go under, and will have no choice but to become the energy supplier of last resort.