The systematic withholding of pipeline capacity, particularly on the coldest days, has cost New England electricity consumers $3.6 billion…
…
On the worst days, including during the Polar Vortex of 2013-2014, up to seven percent of Algonquin’s capacity could be artificially constrained.
“When you relate that back to gas-fired generators, that’s about 28 percent of the gas that would be demanded,” Zaragoza-Watkins said.
This “capacity withholding,” researchers wrote, “increased average gas and electricity prices by 38 percent and 20 percent, respectively, over the three year period we study.”
These sorts of manipulations are always ongoing in any sphere where they can be done with a reasonable chance of success. This is similar to Enron’s price manipulation in the California market, yes, but it is typical of any industry where a few people can finangle prices. The LIBOR (London Interbank Rates) scandal was similiar: A few people could manipulate the rate and cost ordinary people billions of dollars.
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There are always key points in the economy where a few people have disproportionate power. Anything that people must have, that someone else controls, is a leverage point which can be used to extract disproportionate profits.
People must have heating during the polar vortex. People must have loans and credit (and money). People must have houses (during the housing bubble and, indeed, various housing bubbles happening right now.)
If people must, and there is a resource bottleneck, that bottleneck can be squeezed. A pipeline is an obvious bottleneck, but that only some people can create money out of thin air is also a bottleneck. That some people set effective interest rates and profit from them is a bottleneck, and so on.
Careful construction of an economic system limits resource bottlenecks, and assures that those who control the remaining resources can’t profit from squeezing them, if possible, and regulates and inspects the hell out of those bottlenecks that remain profitable to squeeze.
We do not live in such an economy. Rather, our economy has mostly been constructed to encourage such squeezing. Cases where it is genuinely punished are rare (as with virtually all the financial executives getting off in the financial crisis).
This pipeline squeeze looks like it might be the rare exception. But only maybe. Remember, if the executives come out clean, and richer than they would have been otherwise, any fines or punishments will not stop it happening again.
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Johnnygl
Nice find, Ian.
For some additional context, there’s a big push from gas and utilities who want to build more pipeline capacity so they can ship PA fracked gas to Europe.
There’s also a pretty vibrant local opposition in several communities and they’ve got at least a few local power brokers, and some local newspapers on their side. They also have done a lovely job getting on governor Baker’s nerves.
Bill H
Which leads me to my “still small voice crying in the wilderness” that the “law of supply and demand” is utter bullshit. We in California are endlessly told that the price of gas has increased because a refinery has shut down and a shortage has driven up prices. Or it is summer and increased demand has driven prices up. Increased demand? How often do you see lines at the gas station with people bidding on gasoline?
A shortage PERMITS the seller to increase prices, it does not REQUIRE the seller to increase prices. What raises prices during a shortage is not the shortage, it is greed. The only thing that REQUIRES a price increase is an increase in the cost of producing it.
Ché Pasa
Economic doctrine in action.
Enron (seems so long ago now, doesn’t it?) set a standard that one sector after another has acted to emulate ever since, mostly successfully, mostly unnoticed.
Enron collapsed and its leadership was prosecuted. Notice, that doesn’t happen any more. Instead, we have an enabling system that protects the thieves and their thievery.
We just don’t know how lucky we are.
The Stephen Miller Band
Couple this with Trump’s now quite obvious war on the poor as witnessed by his signing of the most recent executive order removing government subsidies for health insurance and his refusal to help the suffering, and dying, Puerto Ricans.
The rich have pulled out all of the stops and are going full-on Helter Skelter and let;s not pretend Trump isn’t their man because he is. They want him, otherwise, they would have assassinated him long ago.
Class War
Bill H
“Trump’s now quite obvious war on the poor as witnessed by his signing of the most recent executive order removing government subsidies for health insurance.”
Yes indeed. Trump discontinuing the practice of inflating profits for insurance companies is definitely a war on the poor. (?) How about some legislation requiring medical service providers to be subject to laws against predatory pricing and anti-competitive price fixing activity? Laws which would drive the cost of medical care down to where subsidies would no lonbger be required because the poor would be able to pay for their medical care.
The Stephen Miller Band
How about a law where there are no health insurance companies because health insurance is not insurance. It’s the mafia taking it’s skim from Vegas.
We’re talking about Trump’s motivation & effect, Bill H. When you look at his actions and ignore his insane words, what little he’s managed to accomplish, he’s sticking it to the poor. Even more so than his predecessors especially if he has his druthers. To the poor people of Puerto Rico and to the poor people of mainland America and to the poor people of North Korea when he and his generals turn it to cinders. To the poor people of Iran when he and his generals deice to invade on behalf of his best friend Israel.
I’m not going to rehash with you everything that’s wrong with healthcare to include the ignominious fact it’s now such a large part of the economy and still it results in more ill health than health. The American healthcare system is a fubar clusterfuck, and Trump is making it even worse and adding insult to injury. He is quite literally a monster. He’s the Abominable. We need a dentist to pull his teeth. Now. He’s the rich’s golem set upon the little people as the final act.
The rich said to the little people, “you want change? Okay, we’ll give you change. Here you go. Enjoy your Orange Julius before we blow the place to smithereens.”
Ché Pasa
@Bill H.
Nice. And this legislation of which you speak will come from what source? Corrupt Republican-controlled congress? Perhaps the ultra-corrupt president will simply decree it? Or?
Bill H
We’re always talking about the president’s motivation. Why? The constitution declares that the president does not run this country.
This latest cut to Obamacare… It was an executive order by Obama that funded it, because he asked Congress to fund it and they voted not to do so. A federal court ruled the payments unlawful, and as of right now that ruling stands. So we excoriate the president for ordering that unlawful payments be stopped, but no one castigates Congress for voting against the funding to begin with. Even after the current president orders payments stopped, Congress could vote to authorize the payments, and they do not even attempt to do so. Where is the anger at Congress for not overturning the presidential action of stopping the payments?
If Congress wanted to send aid to Puerto Rico they could vote to do that. They have not even voted on it. Where is the outrage and anger against Congress for not helping Puerto Rico?
I don’t like Trump. I think he is an idiot and a monster. But he is not the reason we have problems. We had them before he was elected, and we will have them after he is gone. We have a government which is entirely unresponsive to the needs of its people because we keep reelecting that government based on advertisements and lies, voting out of ignorance and misinformation because we are to lazy to seek the truth about those we are electing.
We excoriate the president for cutting taxes. The president cannot and does not cut taxes. Only Congress can do that. All they have to do is reject his budget plan. For years after Obama was in office we were still talking about “the Bush tax cuts.” Obama didn’t cut them. Of ciurse he didn’t. He couldn’t. But Congress could, and they did not even try. They had a president who would most certainly not veto a reversal of the “Bush tax cuts” and they did not even bring a reversal of the “Bush tax cuts” to a vote. They just continued to excoriate Bush for tax cuts which Congress passed while he was president.
The Stephen Miller Band
The constitution declares that the president does not run this country.
The constitution is largely symbolic these days and for those who want something done or want nothing done, it’s easily bypassed. It’s a known fact the corporations and their wealthy shareholders prefer a legislatively deadlocked government because no new regulations of any sort is a good thing for business per the insane planet-destroying business model they all adhere to without fail.
Trump’s executive order is ironic in the sense that it kicks out the last leg of the ACA’s support — the government subsidies to insurance companies. Since healthcare is now a significant percentage of the economy, this means that significant percentage of the economy will be deleteriously affected by Trump’s executive order. Healthcare insurance companies are going to go belly up and their will be a final consolidation in the industry leaving only one or two companies in its wake. At that point, healthcare will effectively be private versus public single payer, but for the rich. The poor will have to heal themselves if you can call American healthcare healing.
The ACA was developed by and for the insurance companies. Their business model is a failed business model without captive customers as is the case with auto insurance. So, they colluded with the Obama Administration by shaking the dust off the conservative Heritage Foundation healthcare plan and tweaking it a bit in order to breath life support into the insurance industry and now Trump is pulling that life support. The patient will die, literally and figuratively.
The rich? The rich have so many options in which to move their wealth around they’re prepared and ready for this contingency, but the poor have no options and so it’s the poor who will suffer once again. Same as it ever was — same as it ever was.
I want to say ironically for the following but it’s not irony in my opinion. It’s intentional insult to injury. As it stands right now, Trump’s executive order will make adequate health insurance unaffordable for the poor and those living paycheck to paycheck which is a hell of a lot of people. However, here’s the insult to injury, the mandate to have health insurance is still in place, meaning these poor people will be required to pay the penalty to the IRS for not purchasing health insurance.
Evil. Pure evil.
The Stephen Miller Band
Bill H, that’s a great point about Obama and the executive orders. The power of the executive has increased tremendously in the past several decades but especially under Obama with his passel of executive orders, so the precedent was set long ago and each consecutive POTUS is not remiss to use this concentrated power.
Hell, if you think about it, the power of the executive was a large part of Lincoln’s thinking & strategy for promulgating the Civil War. Of course, it was disguised as preserving the union, but in the least the effect was to greatly increase the reach, strength and effectiveness of federal versus state. Lincoln greatly increased the power of the executive during the Civil War. For good reason, but nonetheless, Lincoln’s administration transformed the office of the executive tremendously and that office has grown in power and influence ever since especially since America has effectively been at war ever since.