Politicians Get Blame for Energy Mess

Whoever said Californians are a lazy and insensitive lot hasn’t been watching them lately.

Realizing that utility bills in other states were higher than their own, these good people set out to rectify the inequity.

Scheduling around their 40 or more hours of daily slavery at local grindstones and hustling of their kids off to a variety of destinations, average Californians managed to drive natural gas prices through the ceiling. Each took time out from his or her busy day to persuade a Texas supplier to meet with the state’s two leading distributors to put the kibosh on pipeline plans that offered the state a steady flow of cheap natural gas well into the future.

This cheap Mexican and Canadian natural gas would have kept wholesale electricity prices down to levels that would not have driven the state’s retail suppliers to the brink of bankruptcy had not Californians intervened.

If this sounds like a fish story, you should check out the story Gov. Gray Davis and the state Legislature are telling.

According to them, wasteful consumption is the cause of all the state’s electricity woes, despite studies that show Californians are 33% more energy-efficient than they were in the 1970s. These studies suggested that past efficiency contributed to keeping our energy prices as low as they were, but that as the population increased, the state--prodded by environmentalists--did nothing to boost its generating capabilities.

With the state’s inaction now coming home to roost, experts claim that the only antidote for this crisis is for consumers to cut back on electricity use. This in spite of the fact that the biggest problem plaguing California’s electricity distributors is a lack of money with which to purchase readily available electricity, a shortfall of cash that was a result of the Legislature’s deregulation bill.

This will not be the first time that consumers have been led down the path of conservation. Every time, that path has ended the same way: with consumers paying as much, if not more, for using less of whatever it was they were conserving.

The oil embargo in the 1970s and the water crisis in the ‘90s demonstrated how hazardous conservation can get in this new economic arena.

The rules of supply and demand today are best explained as suppliers demanding an arm and a leg if people want something from them. And if suppliers can get consumers to pay the same for using less of whatever they provide, the process frees up a little product to sell to someone else at the new, more bottom-line-friendly rate, keeping chief executives, shareholders and donation-receiving campaigners in the pink.

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Conversely, it is no secret that conservation always hits people at the bottom of the economic chain hardest. But officials in Sacramento have to cover the tracks of their mistakes. Avoiding real solutions such as requiring electricity producers to store natural gas on-site to avoid dramatic price fluctuations, the state hopes to placate the masses with rebates if consumers buy new appliances or cut 20% from last year’s usage.

The problem with this is that many people cannot afford to take advantage of these rebates, and once the already cash-poor utilities begin to feel the pinch of falling sales, their obligatory rate increases will be just one more thing that the poor won’t be able to afford.

Disregarding the old adage that when you find yourself in a hole, sometimes the best thing to do is stop digging, Davis and the Legislature--their focus still squarely on the electricity part of the equation--are missing one important factor: It’s the natural gas prices, stupid!

It is no mere coincidence that the spikes in electricity costs that hit Southern California Edison and Pacific Gas & Electric so hard came at precisely the time that the price their suppliers paid for natural gas skyrocketed. (This was shortly after the pipeline plans were killed.)

But instead of even considering the gas angle, Davis and the Legislature went to work bailing out the utilities and customers of San Diego Gas & Electric.

With the unknown billions of dollars the state has spent so far, it could have built a lot of supply lines and tapped into two additional sources of natural gas that would have relieved the current price crunch until more new--preferably nuclear--power plants could be brought online.

This is another fine mess politicians too caught up in campaigning have gotten us into. And while there’s no explanation for why voters keep filling the chairs in Sacramento with such intellectually challenged representatives, this sad saga sure removes any doubts about why UFOs never land.