You have not defined “just and reasonable price,”
Zeuspaul >Just and reasonable pricing should be COST BASED in a market that has been defined as dysfunctional. I'll pick a number if you want...how 'bout 20 percent above cost.
Whitepine> Interesting position. Let me understand, when gas/electric companies were not earning 20% profit, you would propose to increase their rate of return. Seems as though today’s income is just beginning to pay for a decade of below-average profit, so CA consumers, even if they paid their bills, still owe the companies for historic profits of 20%. Wish it were so. CA changed their regulations (not total deregulation) in an attempt to get even lower prices and a free lunch. Yes, it is too bad the changes did not produce the intended results. Error was socialist planning.
Second, with 20% guaranteed, who pays for new entrants into power production and their costs? If the principle is applied to other areas, there would be rampant over-production of all goods and services…and even if consumers did not want a product(s). Someone (read the state and taxpayers) would have to pay the 20% tax to ensure that each producer received their 20%. For myself, I would move to CA and buy a $3Mil yacht and establish a charter service. Sales and rentals would not matter. Even though few might charter my services, I would be guaranteed 20%. In fact, as my costs went up, so would my profit.
My bags are packed…
(review the legislative history about the impact of rent/price controls in NYC. I doubt many would agree this system is worthy of emulation.)
Taking your example a step further. Assume it is a hot day. I am willing to buy your water @ $2/glass. Thousands of others are also willing to buy your water. In fact, the line is so long that it stretches over the horizon. You only have 20 gallons to sell.
Zeuspaul Why do I only have 20 glasses of water to sell?
Whitepine> 20 gallons, 2000 gallons, no difference. The point is finite supply. Everything is scarce. Point is that if you do not use the price system, you MUST use some other criteria, and prejudice is the only alternative.
Zeuspaul >The supply of energy is short because of poor planning by the energy producers. [*ABC*] The market influenced producers have opted to produce energy from natural gas....the easy way...the way to make a fast buck.
Whitepine> CA power supplies are inadequate from historic lack of investment. Assumption was that CA could buy sufficient quantities on the spot market without long-term contracts. Great idea for free lunch and even lower prices as those with excess capacity were bidding to sell. But when spot market prices rose, crunch time. CA had insufficient long-term contracts. Love your use of cliches>fast buck< Have always been confused by fast and slow bucks. They all look the same to me.
Zeuspaul >You can't argue with success...LADWP has plenty of power available at reasonable cost. They do not have to ration their power.
Whitepine> Observe your misunderstanding of economics. You casually use the words “plenty of power at reasonable cost” as though they have enough to supply the entire state. They do not! Their capacity is finite.
Zeuspaul > Utilities have been guaranteed a profit.
Whitepine> So are you suggesting that any entity that promised to produce power was, or is, guaranteed 15% profit without regard to the price of production? If so, CA would have had much more investment, regardless the costs or (in)efficiencies. Profit would have been guaranteed. Such was not the case or thousands of corps would have installed billions of solar cells and tacked on 15% to their costs since profit was guaranteed by the state. Such was not the case. If you can document the specifics of the guarantee, I certainly would appreciate the source. I am unaware any such guarantee ever existed.
Zeuspaul >If you want market based power you will have a short supply. Market based experiments have proven this to be the case.
Whitepine> Just one example is need to vitiate your generalization. The relatively low prices for natural gas during the previous decade stand in stark contrast to your contention of shortages.
That the economics of power generation and distribution was working is only part of the problem. It was only working in a static world. Power production, population increases, and the costs of producing power are not constants.
Zeuspaul >The US from 1900 to 1990 was static???!!!!!!
Whitepine> { see below[*ABC*] }
CA has experienced growth during the last decade, yet by your own admission, no new production facilities have been built in the last decade. In your previous post you said, “If systems are working it is generally not a good idea to monkey around with them...especially on a large scale.”
Excessive environmental restrictions are now coming home to roost. In fact, CA has revised/created many new rules related to both power consumption and production. It seems the socialists in control did not anticipate the cumulative price effects of their creative legislative actions. Because of new EPA regulations, several refineries are closing. New refineries are not being built because the cost of the new regulations is greater than a normal rate of return. We are creating high prices through excessive governmental intervention. CA is only the worst example. IMHO, the costs far exceed the marginal benefits.
Yes, it seems few in CA want a power plant built in their neighborhood or even in their state.
Zeuspaul >I was referring to my neighbor. It is better to centralized power production facilities than to let every tom dick and harry fire up a generator in his back yard. No new large production facilities have been built in the state in the last ten years or so. However 25 percent+/- of the power generated in California now comes from small independent producers. The Feds and Edison didn't want to build new power plants in California because they did not believe the power use forecasts by the California Energy Commission. Blame it on NIMBY if you want but it is not true.
Whitepine> Perhaps you can document the actions CA tried to take to increase production during the last decade in opposition to FERC and Edison. I have not read anything to support this. Yes, NIMBY and BANANA are the unfortunate hallmarks of the new age. (http://www.enr.com/new/editorials12201.asp)
Zeuspaul >Some things are best left under government control. The government has a good track record building and maintaining roads.
Whitepine> No problem. Increase your taxes and buy coal mines, drilling rigs, pipelines, refineries, etc. Write your own oil/gas/coal exploration and development plan. Run them at cost and create a socialist utopia. If you can do it at a “just price,” I am certain we will all follow your lead. Good luck.
Zeuspaul > The so called *free market* has been in place for many years and it DID NOT result in an electric power system with adequate capacity.
Whitepine> This sentence contradicts your position in [*ABC*] above.
You might review the basic logic of the price system and the difference between shortage and scarcity. My understanding of economics is different than yours.
I don't mean to shy away from further discussion, but my time, too, is scarce. You may post a counter, but I believe I have made a few cogent points. We differ on a number of issues. Readers will create their own views about the relative wisdom of our differences.
Regards,
whitepine |
