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If the prices of energy go sky-high every time there’s a supply crunch, that’s a good thing for the investor, is it not? Am I missing something here? What is
by fallingfrog 5y ago
If the prices of energy go sky-high every time there’s a supply crunch, that’s a good thing for the investor, is it not? Am I missing something here? What is supposed to be the incentive to avoid that situation exactly?
You double your investment, and profit falls. Or, you invest nothing, and rake in the cash. Great plan. I just don’t understand why they expected anything else to happen. Markets are not magical unicorns, they’re just one way among many to set prices, sometimes they’re the best way, sometimes not. Conservatives deify capitalism to the point of absurdity.
- ikiris 5y agoUsually its just basic understanding of history, but there is a specific faction heavily in power in that area that chooses to pretend that things like this are unpredictable because it gains them influence and money.
- caf 5y agoThe issue identified is that many plants weren't able to stay online to sell energy at the extreme prices that were bid. Those plants didn't make windfall profits for their investors, they weren't selling anything at all. Essentially it reached a point where electricity wasn't available at any price.
- Dylan16807 5y agoIf there is sufficient competition, anyone holding out for extreme prices will make less money than anyone that kicks in at moderate prices, and will usually make no money at all. Same for refusing to invest in more plants when they would easily be profitable. Compare the gasoline market in the US. It's sufficiently competitive, so there is no way for gas stations to start refusing offers under $50 a gallon and wait for people to get desperate. But that doesn't mean there will be enough plants, even if there is sufficient competition, it would just push out manipulators.