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19651970197519801985199019952000 15 10 5 0 Yearly Inflation Rate - 1960 to 2001 1960 Oil Price “Shocks” 1973-1974 Oil Price “Shocks” 1979-1980 Consumer.

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Presentation on theme: "19651970197519801985199019952000 15 10 5 0 Yearly Inflation Rate - 1960 to 2001 1960 Oil Price “Shocks” 1973-1974 Oil Price “Shocks” 1979-1980 Consumer."— Presentation transcript:

1 Yearly Inflation Rate to Oil Price “Shocks” Oil Price “Shocks” Consumer Price Index

2 % 5.7% 4.4% 9.1% 5.8% 6.5% 7.6% 11.3% 13.5% Inflation Over Time 1979 Ford Mustang 1974 Ford Mustang 1971 Ford Mustang OIL PRICE “SHOCKS” 6.2% 11% OIL PRICE “SHOCKS” $1.32 $2,700$3,500$5,012 $1.39 $1.50 $42,500 $47,432$73,327 25¢ 28¢ 40¢ Natural Gas 91¢ Natural Gas $1.13 Natural Gas $ (5.3%) (12%) (24%) (13.6%) (60%) (154%)

3 % 1970 ARCO diversifies into coal. Core sampling showed Powder River Basin, in Wyoming, to be a strong resource ARCO SPS SPS decides to build an electric generation plant (Harrington Station) using coal vs. natural gas Powder River Basin Harrington Station

4 Powder River Basin Harrington StationARCO SPS Original Harrington Agreement $2.00 per ton 3.2% 5.7% 4.4%

5 1973 Original Harrington Agreement Show Document $2.00/ton $2.00 per ton ___ yr. Contract

6 Original Harrington Agreement $2.00 per ton SPS ARCO 3.2% 5.7% 4.4% SPS begins construction of Harrington Station

7 Original Harrington Agreement $2.00 per ton SPS ARCO OIL PRICE “SHOCKS” 3.2% 5.7% 4.4% 6.2%

8 Original Harrington Agreement $2.00 per ton ARCO SPS OIL PRICE “SHOCKS” SPS creates TUCO, a wholly owned subsidiary 6.2% 3.2% 5.7% 4.4% TUCO

9 ARCO and SPS/TUCO reopen negotiations regarding Harrington Agreement Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” ARCO’s new core samples show lower quality Sierra Club Litigation begins ARCO recognizes Skyrocketing inflation Sierra Club lawsuit New regulations Lower coal quality 11% 3.2% 5.7% 4.4% TUCO

10 ARCO proposes frequent contract price reopeners to SPS/TUCO NEGOTIATIONS Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club X X SPS/TUCO rejects offer TUCO

11 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club 1975 TUCO NEGOTIATIONS

12 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club 1976 Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton TUCO NEGOTIATIONS Injunction prohibits mining on Federal land

13 1976 Revised Harrington Agreement Show Document $2.698/ton $2.698 per ton ___ yr. Contract

14 1976 State Agreement Show Document $6.50/ton $6.50 per ton ___ yr. Contract

15 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club NEGOTIATIONS Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % TUCO

16 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % Tolk Agreement $7.50 per ton TUCO Powder River Basin Harrington Station Tolk StationNEGOTIATIONS

17 1977 Tolk Agreement Show Document $7.50/ton $7.50 per ton ___ yr. Contract

18 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % Tolk Agreement $7.50 per ton 6.5% ARCO starts delivering coal to TUCO from State landTUCO NEGOTIATIONS

19 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % 6.5% Tolk Agreement $7.50 per ton 7.6% TUCO STATE NEGOTIATIONS

20 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS TUCO 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % 6.5% Tolk Agreement $7.50 per ton 7.6% SPS sells TUCO to Cabot Corporation TUCO (Cabot) STATE NEGOTIATIONS

21 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS TUCO 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % 6.5% Tolk Agreement $7.50 per ton 7.6% TUCO (Cabot) 11.3% OIL PRICE “SHOCKS” STATE NEGOTIATIONS

22 9.1% Original Harrington Agreement $2.00 per ton ARCO SPS TUCO 6.2% OIL PRICE “SHOCKS” 11% 3.2% 5.7% 4.4% Sierra Club Revised Harrington Agreement $2.698 per ton State Agreement $6.50 per ton % 6.5% Tolk Agreement $7.50 per ton 7.6% TUCO (Cabot) 11.3% OIL PRICE “SHOCKS” 13.5%STATE NEGOTIATIONS

23 Sierra Club TUCO (Cabot) 13.5%ARCO

24 Sierra Club 1982 TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton ARCO starts delivering coal to TUCO under Tolk Agreement Sierra Club Litigation resolved

25 Sierra Club 1982 TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton 6.2% Letter of Agreement - Labor and Fringe Benefits adjusted by indices Letter of Agreement Labor & Fringe Benefits TOLK

26 Sierra Club 1983 TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton ARCO starts delivering coal to TUCO under Revised Harrington Agreement Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% TOLK

27 Sierra Club TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% TOLK R. HAR.

28 Sierra Club 1985 TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO & TUCO negotiate and agree on price reduction to Tolk Agreement ARCO Pays $300 Million TOLK R. HAR.

29 Sierra Club 1985 TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO Pays $300 Million 3.6% TOLK R. HAR.

30 Sierra Club TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO Pays $300 Million 3.6% 1.9% TOLK R. HAR.

31 Sierra Club TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO Pays $300 Million 3.6% 1.9% 3.6% TOLK R. HAR.

32 Sierra Club TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO Pays $300 Million 3.6% 1.9% 3.6% 4.1% TOLK R. HAR.

33 Sierra Club TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO Pays $300 Million 3.6% 1.9% 3.6% 4.1% 4.8% TOLK R. HAR.

34 Sierra Club TUCO (Cabot) 13.5%ARCO 10.3% Tolk Agreement $7.50 per ton Letter of Agreement Labor & Fringe Benefits 6.2% 3.2% 4.3% ARCO Pays $300 Million 3.6% 1.9% 3.6% 4.1% 4.8% 5.4% TOLK R. HAR.

35 TUCO (Cabot) ARCO 5.4%

36 TUCO (Cabot) ARCO 5.4% 4.2%

37 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% ___? Million Tons of coal delivered between 1977 and 1993

38 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% TUCO refuses full deliveries of coal from ARCO X X ARCO sues TUCO for reneging on contract

39 TUCO (Cabot) ARCO 5.4% 3.0% 4.2% ARCO sues TUCO for reneging on contract Court Judgement in favor of ARCO - Contract Enforced Court orders TUCO to pay $20 Million to ARCO X X

40 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Court orders TUCO to pay $20 Million to ARCO

41 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% TUCO attends Jay Roman seminar Jay Roman Seminar Court orders TUCO to pay $20 Million to ARCO

42 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar TUCO sues ARCO- “Pricing Claims” TUCO sues ARCO Court orders TUCO to pay $20 Million to ARCO

43 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar 2.6% Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

44 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar 2.6% 2.8% Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

45 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar 2.6% 2.8% 2.9% Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

46 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar 2.6% 2.8% 2.9% 1997 Revised Harrington Agreement $2.698 per ton Revised Harrington Agreement ends TOLK Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

47 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar 2.6% 2.8% 2.9% 1997 Revised Harrington Agreement $2.698 per ton 2.3% TOLK Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

48 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% 2.6% 2.8% 2.9% Revised Harrington Agreement $2.698 per ton 2.3% 1.6% TOLK Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

49 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% 2.6% 2.8% 2.9% Revised Harrington Agreement $2.698 per ton 2.3% 1.6% 2.2% TOLK Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

50 TUCO (Cabot) ARCO 5.4% 4.2% 3.0% Jay Roman Seminar 2.6% 2.8% 2.9% Revised Harrington Agreement $2.698 per ton 2.3% 1.6% 2.2% 3.4% TOLK Court orders TUCO to pay $20 Million to ARCO TUCO sues ARCO

51 TUCO (Cabot) ARCO 3.4%

52 TUCO (Cabot) ARCO 3.4% 2.8%

53 TUCO (Cabot) ARCO 3.4% 2.8% TUCO asserts “True Up” theory


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