Happy Travels? Will Federal Policy Bring Economics to Airports?

Lynne Kiesling

Today’s a big national travel day, and many of us are flying about. Painful. As we’ve discussed here before, airport takeoff-landing slot congestion pricing would be the most sensible and efficiency-promoting policy, but the FAA, Congress, and the airlines are not inclined to implement anything sensible or efficiency-promoting.

One of the outgrowths of last month’s airline policy meeting was a commitment from the White House to “do something” about airport congestion. This fact sheet outlines the short-term band-aid policy fixes they suggest; most of them are fairly anodyne and somewhat hard to enforce.

But two important things come out of this fact sheet. One is that Congress has failed to act on the FAA modernization legislation currently before it. This failure is appalling, but unfortunately not surprising. The second is that the administration has some pretty strong language in favor of congestion pricing:

The key to solving this problem is managing the demand for flights at overloaded airports. Market-based mechanisms can encourage airlines to spread out their flights more evenly during the day, make better use of neighboring airports, and move the maximum number of passengers on each flight.

Market-based mechanisms like “congestion pricing” are widely accepted and critical to the functioning of many other areas of our economy. Phone and electricity companies balance supply and demand by adjusting their rates during peak usage hours. Airlines themselves smooth out peaks and valleys in demand by varying the prices of their tickets by time of day and week. Applying congestion pricing to airport usage has the potential to make today’s broken system more predictable, more reliable, and more convenient for travelers.

I hope their articulation here becomes more than just political lip service.

Happy travels! Or, at least, not-too-odious travels, to you all.

Generation Shares by Fuel Type: Regulated and Deregulated States

Michael Giberson


Courtesy of industry thinker Jeffrey D. Roark comes this contribution to understanding some of the differences between power produced in “regulated” and “deregulated” states. Click on the image to see a larger version. Charts were developed using the EIA data cited in the image.

Roark draws attention to two points: first, that the deregulated states rely much more heavily on gas relative to the regulated states, and second, that deregulated states are net energy importers as a group.

I would guess gas is big in deregulated states in part because the post-restructuring boom in generator construction coincided with a period of relatively low gas prices. Just a guess. Actually, to expand and emphasize Roark’s first point, the deregulated states feature a higher relative use of generation in nearly every category except coal. Coal is “huge” in the regulated states, and merely “big” in the the deregulated states.

I wonder if “Power in the Public Interest” has looked at emissions per MWh in regulated and deregulated states?

On the second point, I would speculate that it is related to a broader issue. The states that chose to restructure their electric power industry regulations were predominantly higher-cost states. These states were probably net energy importers even before they restructured. Before reading too much into the fact that the deregulated states are net energy importers, I’d want to look at the trend over the last twenty years or so.

Prices Aren’t Always Property

Lynne Kiesling

I have a question, or qualification, of Mike’s excellent post about prices as property the other day. What about the string of court rulings that allow Intercontinental Exchange to use NYMEX’s market prices for ICE’s transaction settlements? Isn’t that equivalent to declaring that NYMEX does not have a property right in its own market prices?

ICE has argued consistently that NYMEX is simply trying to assert copyright over their prices to erect an entry barrier and to thwart competition. NYMEX argues that they have a clear property right to the prices that emerge from their market transactions.

The courts have consistently supported ICE’s use of NYMEX’s prices. Is this the equivalent of treating financial market prices as a common-pool resource?