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Yes. And then the incentive will be to buy up all available capacity and create artifical scarcity. If you believe that we are dealing with profit maximizing ac
by sanp 6y ago
Yes. And then the incentive will be to buy up all available capacity and create artifical scarcity.
If you believe that we are dealing with profit maximizing actors then this is the likely outcome in the absence of any price control.
Lets say you believe that a competitor may come up to provide the service as soon as the price becomes attractive. Power generation is not something that can be stood up (at least not yet) at the drop of a hat.
There are far better solutions to this problem and they all involve more and not less regulation.
- kortilla 6y ago> And then the incentive will be to buy up all available capacity and create artifical scarcity This makes no sense. Which market is it you think can be cornered here? Someone buying up all of the natural gas in the world? All of the generators? What? The thing about market prices is any time someone tries to corner a market and drive up prices, it incentivizes more sellers to enter the market. If you’re talking about small periods of time, like cornering it for a week, that’s not really easy considering futures traded against this market would smooth the price like they do for every other commodity. Same thing applies to oil, oranges, natural gas itself, coal, refined copper, etc. There is nothing special about electricity other than the fact that people feel entitled to have it at all times and cheaply despite the fact that generation costs vary widely. > There are far better solutions to this problem and they all involve more and not less regulation. The California power system is a bastion of regulated electricity and it’s an unmitigated disaster. The prices and reliability are worse than the one in Texas. You just don’t notice because the fallout (other than burning down half of the state) doesn’t freeze people to death.