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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (43498)	12/17/2003 5:45:42 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

Actually Ray, demand for electricity is elastic, though not as springy as lots of products. The power supply companies in NZ have ridiculous contracts which had them supplying households at prices lower than they were buying from producers. The supply was in trouble due to low water levels in hydro dams and damn all rain. So they asked everyone to save power. Which they did. Demand dropped about 10%, with no price changes. Just a community spirit of 'turn off the lights, heaters and anything else which you don't really, really need'. If the power companies had sensible contracts and whacked people with a doubled or quadrupled price [which industry experienced] they would find a very rapid drop in demand. A lot of industries did in fact turn off their businesses during high-priced times. A problem for the companies when the rain came was that once people were used to not using electricity, they didn't bother starting again [they saved some money on their power bills and they quite liked that, and habits take some changing]. The sharks in California circled around the government-created shambles and bit off big chunks [as sharks do]. The fault lies with silly government rules, not the sharks. Of course if somebody throws live food in the water, the sharks will pounce. Mqurice