Wednesday, June 02, 2004

I Told You So.

First, a little scene-setting:

From June 1999 to September 2001, I was working at a place in San Francisco called Pulse Entertainment. They did streaming 3D graphics over the web . . . typical late-90s dot-com startup kind of place to work, and typical early-00's layoff. Anyway, when I was working there, I had a long, involved discussion with a co-worker of mine, David (who was a pretty excellent guy, despite his politics), about the energy industry deregulation. My argument was, more or less, "What's to keep these unregulated energy companies from deliberately restricting energy flow in order to drive prices sky-high?" David, a dedicated libertarian, argued that it wouldn't be in their best interests to do that, because the laws of supply and demand dictated that they couldn't make money that way, as usage would fall off as prices rose. it's a fairly standard sort of argument. "The Invisibe Hand is never wrong" and all that.

Time passed.

Then, in 2000 the energy crisis hit. David and I revisited our discussion. "Well," I said, "surely this is proof of what I was saying?" "No, no," said he, "the problem isn't that the energy companies are manipulating the market, the problem is that we don't have enough supply. If anything, we should have deregulated further!"

Well, this morning, I woke up to read that apparently there are tapes of Enron employees gloating over how much money they were making by deliberately restricting energy flow in order to drive prices sky-high.

I hope you'll all indulge me, but it's not too often I get to win a four and a half year old argument.

David, I was right.



Anonymous Anonymous said...

Toquam at

California did about the dumbest de-reg anywhere, ever.

NY, NJ, TX or a dozen other states have all had lower rpices, especially for job-producing wholesale users (think factories).

California had not built a power plant in about 30 years - we tried to re-power the last coal-fired plant in the LA basin, but California EIR is such a zoo, it was impossible.

How about retail-wheeling - I use green power, costs a scooch more, but I like to visit the windmill farms.

Myself, if Gray-out was not such an abject idiot, California would never have had a melt-down, might have had some rules, the System Operator would have had the power to manage net flows over bottlenecks (like Victoria in Australia, for example - they did it right).

7:33 PM  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

7:33 PM  
Blogger Myca said...

Yeah, Toquam, that may well be. My faith in the deregulatory skill of the CA state government is less than stellar, so it's totally plausible that they screwed it up. My point is, whether it's true or not, it's absolutely clear that Enron was deliberately gaming the system in order to soak the public for obscene amounts of money, and that they made whatever problems we had worse while negating any possible benefits.

I mean, look, that was 2000, right? Well, had we seen the same sorts of problems previous to then? No, not to anywhere near the same degree. Why not? Easy. We hadn't deregulated the energy industry, and, thus we weren't giving snake-oil salesmen like Enron a chance to rip us off. Maybe 'more' or 'better' deregulation would have prevented this, but it's becoming increasingly clear that these people are thieves, pure and simple, and, as far as I'm concerned, you don't even let thieves in your door, no matter what safeguards you have on their good behavior.

9:26 PM  
Anonymous Anonymous said...

You have to express more your opinion to attract more readers, because just a video or plain text without any personal approach is not that valuable. But it is just form my point of view

10:22 AM  

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