>-----Original Message-----
>From: asa-owner@lists.calvin.edu [mailto:asa-owner@lists.calvin.edu]On
>Behalf Of Kenneth Piers
>Sent: Thursday, January 25, 2001 1:48 PM
>REPLY: I am all with Glenn that we should pay the "real cost of the
>product". But there is a problem with this when those who supply the
>product have a monopoly on their services. In such cases what is charged
>to consumers and the real cost of the product may have little
>relationship to each other. Trusting the "free market" in such cases
>also has its problems. Since the public generally neither gets to see
>the utility's books nor the invoices that the utility receives from
>their suppliers, it seems that in these cases there is a genuinely
>positive role for an independent body to play in seeing to it that fair
>prices are charged to consumers - prices that include the "real price of
>the product" but do not involve gouging.
I agree with you. Monopolistic actions should not be tolerated.
In Michigan we are just about
>to bear the brunt of our actions in utility deregulation. When this was
>done about 15 months ago, the agreement was that utilities would fix the
>price they charged to consumers for at least two years (a foolish
>agreement in my opinion but...). Now the utilities have applied for
>early release from these commitment and want to raise the price of their
>product by 75 to 100% - reflecting, they say, the increased prices they
>have to pay their suppliers. None of which makes us consumers happy. For
>me it will merely mean somewhat less discretionary spending. But for low
>income people this will be a very severe jolt.
About 15% of the US electricity is generated by natural gas. Because there
is a shortage now (after about 20 years of a surplus) of natural gas, the
price has gone up 4x. Thus that 15% now costs 4 times what it used to. That
means in simple arithmetic, that this component alone constitutes a 60%
increase in cost for your electricity. Oil accounts for 10% of the
electrical generation. It's cost has gone up about 2x. which means an
additional 10% increase in cost. Thus one can account for the utilities
request merely by these two minor components of electricity. And now
electrical generation capacity in the US is less than optimal so with
scarcity up goes the cost even more.
The alternative to paying this jolt is to not have electricity.
Now, if one wants to know why oil and gas are getting more expensive, it is
partly due to the decline in production throughout the world, partly due to
the lousy rate of return on investment capital in the oil industry over the
past 20 years, and partly due to the fact that the US removed areas from
exploration that could contain significant reserves. Such areas are offshore
California, which wants energy without allowing any drilling, parts of
Alaska, which people want to maintain for the polar bears while Californians
go without electrical power for their jobs, and the area around Florida
where millionaires don't want to see a production facility marring their
beautiful view. We have choices and we made them. Now we don't want to live
with the results.
>We can be sure that energy prices will continue to rise in the future.
>My greatest immediate concern is for those who can ill-afford such
>increasing costs. My longer concern is that our entire economy could be
>imperiled.
It is over the next 30 years and that is my long term concern also.
glenn
see http://www.glenn.morton.btinternet.co.uk/dmd.htm
for lots of creation/evolution information
anthropology/geology/paleontology/theology\
personal stories of struggle
>
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