Free Market vs. Re-regulation
What are we to learn from the problems facing electric power customers in southern California this summer? As I emphasized in the book, “Electric Power Generation: A Nontechnical Guide,” published by PennWell, the electric industry has been “re-regulated,” not deregulated.
Using the telecommunications model, state “gummints” have done their best to improve competition by separating electric generating facilities from local distribution companies and long distance transmission operations. Also, more non-utility generating plants are now allowed to sell electric energy to consumers.
The re-regulation schemes were the best compromise consumers, legislators and regulators and utilities could come up with. It looked like a win-win-win situation for a change. No one foresaw OPEC raising the price of oil.
As much as I believe that 90 percent of environmental regulation is bogus, the new paradigm does not hurt consumers per se. Whether energy becomes more expensive because of legislation or scarcity, there is increased demand for more fuel efficient vehicles. While a GMC Tahoe probably uses 50 percent more gasoline per mile than my Ford Escort, it probably uses 50 percent less gasoline than my first car, a ’65 Dodge with a 225 cubic inch Slant Six engine! And it runs cleaner on lower octane fuel without lead.
OPEC does not have nearly the clout it had in the 1970s because we now use mostly coal, nuclear, and natural gas to generate electricity. OPEC may give us pause to think if we want an even bigger SUV next time around, but if they keep oil prices at current levels, domestic production may become viable and the member countries may wish they had not done so. As long as prices remain reasonable, it is in our long term national interest to let the Arabs use up their natural resources rather than our own!
Those who would slam “free markets” because of “re-regulation” and the problems in San Diego forget this is not an “apples-to-apples” argument. Adam Smith’s “Invisible Hand” works whether we pass laws against it or not. However, as the Soviets and other Communist and socialist “gummints” have shown, economies can be destroyed by legislation, but not forced to grow by edict.
No one’s economic model is perfect. There will always be bumps in the road.
However, the free market model is based on reality and has a pretty good track record.
University of Massachusetts
I commend you on your article in the May issue (“Wind Project Siting Faces Unique Hurdles”) dealing with wind energy. It is good to see more exposure of these newer technologies in traditional power generation magazines. Your commentary on the siting process for wind turbines was very accurate and thorough. However, one critical component was missing, which deals with the collection of meteorological data at the site in order to determine whether or not the site is energetic enough for large or small scale development.
The siting process has come a long way since wind energy was reborn in the late 1970s and early 1980s. Originally, the meteorological aspect was the only siting component considered important. It still is the single-most important factor when considering the overall effectiveness or economics of a wind plant. Recognizing the esthetics, noise and environmental issues, all must be addressed when siting any type of turbine these days.
President, Springhouse Energy Systems Inc.