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1. 

   Sean Casten Posted 8:56 am
   03 Apr 2009

   A fun thing to think about: Suppose you wanted to destroy Grist and the only tool at your disposal was the org chart.  Here's an easy way to do it:1. Make sure that there is no single person atop the org chart.2. Make all decisions contingent on the approval of three separate committees, each of which has the authority to reject, but none of which has the ability to unilaterally approve.3. For one of those committees, break it into 51 separate sub-committees, any one of which can act unilaterally outside the larger body.How long would you give Grist given that organzation structure?  Now note that this is exactly how we regulate electricity.  Building, siting and operating power assets are a function of environmental regulations, electric rate setting regulations and a slate of other public interest regulations (siting, tax policy, etc.)  The rate setting is done by 50 states plus the feds.  It is frankly a wonder that we have any power at all given that structure (and that's even before we get into FERC vs. Congressional jurisdiction).  But - as you note - it is many miles away from an efficient market.  With the possible exception of agriculture, I'd be hard pressed to name any market that is less regulated than electricity (and thus, less divergent from the theory of free markets.)All that said, I'd take a bit of exception on oil markets.  On the E&P side, you're right, but refining is damned near a perfect market.  (Which is why the profitability of oil majors is primarily a function of the "upstream" exploration divisions.)  That's not to dispute your point - simply that painting the industry as a whole with a broad anti-competitive brush has the potential to perpetuate the nonsense about refinery price gauging that always creeps up whenever gasoline prices rise.

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2. 

   KenGreen Posted 10:27 am
   03 Apr 2009

   Dave -You've created a straw man here. Other than a very few fringe anarcho-capitalists, advocates of "free markets" accept that courts have legitimate roles in protecting contracts, and preventing monopolies.When virtually anyone on the right says "free market" they mean "a market where free trade is allowed within the law, which should preferably regulate lightly and uniformly."The problem we have in the energy sphere is that the markets are neither lightly regulated nor uniformly regulated, and in some cases, the "within the law" part becomes dubious as well.Again, the answer is not to pour on additional layers of bad regulation, it's to reform energy regulation so there IS a relatively undistorted market in which price signals can work, with enough regulation to keep the players honest.

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   1. 

      David Roberts Posted 3:29 pm
      03 Apr 2009

      Ken, perhaps you are referring to the world of conservative
      academics. In politics, where this stuff gets hashed out, people whinge
      about interfering with the free market all the time. Watch Fox News for a while. Watch Congressional debate for a while.As
      for trying to push energy markets closer to the open, competitive
      market ideal: sure, I'm absolutely with you. Let's remove burdensome
      regulations. Let's expose regulated monopolies and de facto monopolies
      to competition. Let's price externalities into the market. Let's build
      and open up energy infrastructure that all parties can use on an equal
      basis. I honestly don't know why there isn't more cooperation between
      greens and libertarian types on this stuff. Far as I'm concerned the
      closer you get to genuinely free markets, the closer you get to clean
      energy.But show me a single conservative politician who
      advocates for anything even remotely resembling this. Have you seen
      Newt's big energy/climate plan? It is predicated entirely on
      subsidizing favored industries. Entirely! How conservativism got there
      I have no idea, but there it is, and its inconsistent and sporadic
      hand-waving at free markets deserves nothing but derision. As Sean is
      fond of saying, there's a world of difference between pro-business and
      pro-market.

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3. 

   Sean Casten Posted 10:35 am
   03 Apr 2009

   I disagree with the strawman, Ken.  There are no shortage of voices that assert implicitly or explicitly some variant of "if it's such a good idea, someone would have done it already". (Indeed, this underpins the entirety of the argument for CO2 reduction costing money; those - like me - who assert otherwise are regularly challenged that if there are such good opportunities to profitably reduce CO2 emissions through conservation, efficiency, etc., the free market would have already gobbled them up.)  The problem with that logic is that it only holds up if you presume some underpinning efficient-market hypothesis driving efficient capital allocation in the energy space.  Which - per David's post - simply doesn't exist. That's not in anyway to disagree with your point that efficient markets need to be understood to be markets that work within regulatory boundaries.  As I'd noted here, being pro-market is not synonymous with being pro-anarchy.  It simply means that one seeks the conditions within which market efficiency can take place (no barriers to entry or exit, etc.)  Those conditions do not exist in any anarchy, but they also don't exist in our over- and mis-regulated energy markets.  I believe this is the point that David was making.

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