Saturday, February 18, 2006

Then the Evil Cheney Stopped the Rain

Here is what Alec Baldwin, a pompous Hollywood type, had to say about Cheney, Whittington and Enron (this Baldwin character can really get around!) on the Huffington Post:
“What would Cheney do about the whole secrecy thing then? I mean, this is the guy that sicced Enron on Gray Davis and the state of California to embarrass Davis, trigger the recall and then watched Arnold Schwarzenegger become governor of California. (To this day, perhaps, still the low point in American political life.) Then Cheney covered it up.”

Obviously Mr. Baldwin has not been able to figure out what happened in his own backyard. On the other hand I don’t know why anyone would expect the likes of Mr. Baldwin to know what happened five years ago in his homestate, after all the guy does play “dress-up” for a living. What we know about the Califonia electrical crisis of 2001 is that the state had an unsustainable regulatory scheme that relied on low prices for other energy sources, such as natural gas. The legislators who set this scheme up assumed that there would be no spike in natural gas prices. During this time California electrical utilities, like utilities around the nation were producing more and more electricity using clean burning natural gas. During this time the enviromental gas bags who insisted that natural gas was the preferable way to generate electricity would go to court in order to deny any attempts to drill for more of the natural gas that our nation was using at ever increasing rates. Those groups are continuing that activity today; in addition they are protesting attempts to build facilities to import natural gas. This is a classic set up for higher prices; increased demand combined with a stagnant, throttled supply. The price of natural gas was up everywhere in the nation that winter but Californians threw the biggest hissy-fit, claiming that the laws of supply and demand do not apply to their tanned selves. However Californians do believe that the laws of supply and demand apply to their houses, ironically, those houses are inanimate objects.

The regulatory scheme not only eventually bankrupted California utilities but it also set up byzintine energy purchasing rules that did not allow pre-purchase hedging of prices and in fact forced California energy providers to purchase their energy needs on an as needed daily basis. The requirement that the energy concerns had to use the spot market left them at the mercy of firms like Enron, a criminal enterprise. Let me be perfectly clear; although firms like Enron ripped off their customers they did not cause the factors that underpinned that historic bull market in natural gas and electrical prices.

The factor that I alude to in the title is the fact that the state of California got a sizable amount of its electricity from hydro damns, obviously those damns rely on steady river flow and thus steady rainfall. For about the 5 years leading up to the California energy crisis the West had been receiving less than adequate levels of rainfall. The diminished spring runoff combined with lower levels of summer rains meant lower river levels and thus less hydro-electricity. This shortage became so acute that aluminum plants in the northwest were shut down due to the loss of the cheap electricity provided by the regional hydro-power damns. When the Canadian government made the decision to provide hydro-power to their own citizens rather than the citizens of California Gov. Grey Davis made the bizzare decision to sue Canada over Canada’s rational decision to provide power to their own freezing citizens rather than the subsidised hot tubs of Santa Barbara.

This loss of hydro-electricity combined with the historic and sustained spike in natural gas prices left the California electrical market in the shambles of bankrupt electric companies and daily spot shortages until Governor Davis made the mistake of hedging the states needs for years to come at the very high prices. Had the California legislature made the decision to price the states’ future needs during the mid-nineties instead of putting their bizzare regulatory scheme into place they would’ve ended up paying prices that would’ve been less than twenty-five percent of what they paid during the ensuing panic. The liberal legislators of California were worried that the states’ utlity companies would make too much money; instead the companies went bankrupt and the state endured rolling electrical blackouts. Anyways, it is bizzare to blame the California electrical problems on Enron, Cheney, Bush or anyone outside of the California political classes. Unless you believe that Cheney can stop the rain. Maybe Mr. Cheney has some sort of “ant-rain” dance; he’s from Wyoming, you know, they have actual Indians there.

Mr. Baldwin also calls the election of Arnold Schwartzenager “To this day, perhaps, still the low point in American political life”. Does that bit of hyperbole even desrve a response? Okay here goes: Worse than Watergate? Worse than Tammany Hall? Worse even than the Vietnam War? Obviously the comparrisons could go on all day; the point is that Mr. Baldwins statements are simply ridiculous.


Blogger Mary said...

No Shit!

12:13 PM  

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