At the Master Resource blog today: “In Defense of Price ‘Gouging’ (lines and shortages are uneconomic, discriminatory).” In the essay I emphasize the unintended bias that results when consumer demand surges and supplies are tight, as for example when winter storm forecasts lead consumers to rush to the grocery store for bread and milk. Because … More You Should Probably Raise Prices a Bit During Emergencies
If the oil market is reasonably efficient, then the price of a barrel of oil should reflect something like the cost of production of the highest-cost barrel of oil needed to just satisfy demand. In other words, the market price of oil should reflect the marginal cost of production. The price of oil on the world … More How Can the Market Price of Oil Fall So Far So Fast?
I suspect the simplest answer to the title question is “always.” Maybe the answer depends on your definition of “distort,” but both the intended and generally expected consequences of state utility rate regulation has always been to push costs to be something other than what would naturally emerge in the absence of rate regulation. More … More When Does State Utility Regulation Distort Costs?
Yes, solar power systems are getting cheaper and battery storage is improving. The combination has many folks worried (or elated) about the future prospects of grid-based electric utilities when consumers can get the power they want at home. (See Lynne’s post from last summer for background.) An analysis by Moody’s concludes that battery storage remains an … More Moody’s Concludes: Mass Grid Defection Not Yet on the Horizon
EnergyWire reports, “FERC’s Clark looks to states for help fixing dysfunctional markets.” It is, I guess, a reasonable impulse. Given the way regulatory authority over the electric power industry is currently divided between the feds and the states, there are limits on what the one can do without the other. We saw in the fate … More FERC’s Clark Looks to States for Help with Regional Markets
The tragedy of the commons story is well known and examples abound, but I still enjoy finding new examples in unexpected places. Here is one such example, first published in 1992 but new to me. The building referred to is an apartment building in Yugoslavia; the time described isn’t exactly identified in the article, but … More Tragedy of the Commons, Yugoslavian Apartment Building Laundry Room Edition