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I don’t think what you’re saying jives with the reality of what happened in Texas. The price of electric and natural gas skyrocketed during the shortage. A comp

by oivey 6y ago

I don’t think what you’re saying jives with the reality of what happened in Texas. The price of electric and natural gas skyrocketed during the shortage. A company that winterized their equipment stood to make a killing. And yet, despite the massive profit incentives, large swaths of Texas were blacked out due to lack of preparation. Besides that, the economic damage of the outages far outweigh how much winterization would have cost. The power companies are unlikely to bear the burden of that. All together, that’s not a good recipe for a pure free market system. People also find the idea that only the rich can afford to have heat so that the pipes in their walls don’t burst distasteful.

gruez 6y ago
>The price of electric and natural gas skyrocketed during the shortage. AFAIK the price was capped. https://news.ycombinator.com/item?id=26160546 https://news.ycombinator.com/item?id=26160546
- wavefunction 6y ago
  Wholesale prices are capped. They contribute to but don't limit the price paid by retail customers.
- oivey 6y ago
  For context, the cap is nearly 100x the normal price. In colder states power companies manage to be profitable at around the normal price of electric in Texas. The price of winterization isn’t that high, and a company that did it could have made a year’s worth of profit last week. The cap was very high and did not contribute to the outage. In your other post you say this is a once in a century event. It really isn’t. This is the 3rd time since 1989 that Texas has had outages due to insufficient winter prep. It’s more like a once in 10 years event.
tankenmate 6y ago
there is also another externality, due to perception (regardless of whether it is true) that it affects non rich people more means that it build distrust. trust (and in particular systemic trust, e.g. rule of law) reduces transaction costs; i.e. you can rely on others to do their job properly without having to continually monitor them and build in unnecessary contingencies.

by oivey 6y ago

gruez 6y ago

>The price of electric and natural gas skyrocketed during the shortage. AFAIK the price was capped. https://news.ycombinator.com/item?id=26160546 https://news.ycombinator.com/item?id=26160546

wavefunction 6y ago
Wholesale prices are capped. They contribute to but don't limit the price paid by retail customers.
oivey 6y ago
For context, the cap is nearly 100x the normal price. In colder states power companies manage to be profitable at around the normal price of electric in Texas. The price of winterization isn’t that high, and a company that did it could have made a year’s worth of profit last week. The cap was very high and did not contribute to the outage. In your other post you say this is a once in a century event. It really isn’t. This is the 3rd time since 1989 that Texas has had outages due to insufficient winter prep. It’s more like a once in 10 years event.

tankenmate 6y ago

there is also another externality, due to perception (regardless of whether it is true) that it affects non rich people more means that it build distrust. trust (and in particular systemic trust, e.g. rule of law) reduces transaction costs; i.e. you can rely on others to do their job properly without having to continually monitor them and build in unnecessary contingencies.