We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

Home / Markets / Industries / Energy

Tuesday, July 08, 2008

El Paso Corporation Announces Expansion of Raton Basin Pipeline

Email this Story | Respond to Editor | Print

Comtex

HOUSTON, TX, Jul 08, 2008 (MARKET WIRE via COMTEX) ----El Paso Corporation (NYSE: EP) announced today an expansion of the Colorado Interstate Gas Company (CIG) natural gas pipeline transmission system that serves the Raton Basin. CIG's Raton Expansion will provide approximately 130 million cubic feet per day (MMcf/d) of incremental firm capacity from the Las Animas County, Colo., area of the growing Raton Basin northward along the Front Range of Colorado to the Cheyenne Hub. The expansion, expected to cost approximately $146 million, is supported by long-term firm transportation commitments with three shippers for nearly all of the expansion's capacity.

"CIG has worked closely with Raton Basin producers to provide the necessary pipeline infrastructure to support the continued growth in production," said El Paso's Western Pipelines President Jim Cleary. "This expansion provides producers with access to diverse markets both east and west via the Cheyenne Hub, which would potentially include access to growing demand centers in Nevada, Oregon and northern California through El Paso's Ruby Pipeline."

CIG's Raton expansion will consist of 118 miles of 16-inch pipeline, and El Paso has entered into a fixed-price contract for the purchase of steel pipe for the expansion. The expansion will increase CIG's capacity from the Raton Basin to more than 540 MMcf/d of natural gas. The project is expected to be filed with the Federal Energy Regulatory Commission by early 2009, with construction beginning in late 2009. The in-service target is the second quarter of 2010.

El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner. The company owns North America's largest interstate natural gas pipeline system and one of North America's largest independent natural gas producers. For more information, visit www.elpaso.com.

El Paso Corporation Cautionary Statement Regarding Forward-Looking Statements

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, including, without limitation, our ability to obtain all necessary regulatory approvals and to successfully construct and operate the proposed facilities described in this release; general economic conditions in geographic regions or markets served by El Paso Corporation and its affiliates, or where operations of the company and its affiliates are located, and other factors described in the company's (and its affiliates') Securities and Exchange Commission filings. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. The company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the company, whether as a result of new information, future events, or otherwise.

 Contacts: Investor-Media Relations Bruce L. Connery
   Vice President Office: (713) 420-5855 Media Relations Richard Wheatley Manager Office: (713) 420-6828

SOURCE: El Paso Corporation

Copyright 2008 Market Wire, All rights reserved. **********************************************************************
   As of Friday, 07-04-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated an
   UPTREND on 04-03-2008 for EP @ $16.98. For more information on SmarTrend, contact your market data provider or go to www.mysmartrend.com
   SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright � 2004-2008 Comtex News Network, Inc. All rights
   reserved.