Posted: February 7, 2011 in by John Dilligent
Tags: , , , ,



The state of Texas imposed rolling blackouts for only the second time in over two decades on February 2nd, leaving nearly 1 million homes in darkness and without heat for up to an hour, causing some schools and businesses to shut down, and spurring traffic snarls as some traffic lights stopped working. And the Electric Reliability Council of Texas (ERCOT), the agency responsible for the blackouts, warned that it may be forced to do so again unless more power plants come back online soon. The outages sent spot power prices soaring up to 60-fold their prior rates at one point, and electricity had to be imported from Mexico.

“Rolling blackouts in Houston — you would have never thought you would see the day in the energy capital of the world,” Jack Moore, CEO of oilfield services equipment producer Cameron said on a conference call conducted from a division office because its Houston headquarters had no power.

The Public Utility Commission of Texas ordered a probe into whether market manipulation played a role along with harsh weather in disrupting natural gas and electricity supplies to millions of people, and to see if power generators, pipeline companies or others broke market rules. The state Senate committee that oversees the utility commission is also planning to conduct hearings on the blackouts. Among the questions are whether some firms faked power-plant problems to push prices higher, or were slow to restart plants that were off-line.

If that’s the case it wouldn’t set any historical precedents: during California’s energy crisis of 2000-2001, unscrupulous power providers feigned equipment problems to drive up the price of electricity.


When is a tax not a tax? When you call it Cap and Trade…

Cap and Trade is the tax that dare not speak its name, and Democrats in particular are hoping that no one happens to notice who’s really going to be paying it. With Obama depending on vast new carbon revenues in his budget and Congress promising a bill by May, perhaps Americans would like to know just who’s getting stuck with the tab.

Politicians love cap and trade because they can claim to be taxing “polluters” and not consumers. But that’s not nearly the case in reality. Once the government creates a scarce new commodity, in this case the right to emit greenhouse gasses, then mandates that businesses buy it, the costs will inevitably be passed on to consumers in the form of higher prices. Peter Orszag, Obama’s budget director, told Congress last year that “Those price increases are essential to the success of a cap-and-trade program.”

Hit hardest would be the “95% of working families” that Obama loves to keep mentioning, while typically omitting that his no-new-taxes pledge comes with the caveat: “unless you use energy.” And who’s going to bear the brunt of the burden? Poor and middle-income households, who spend more of their paychecks on things like gas to drive to work or to buy groceries, and for home heating.



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