I filter through a lot of information every day — books, articles online, pretty much whatever comes my way — and out of all those words, whatever sticks in my head is what I write about.
So what is sticking in my head right now?
The increase in electric rates, to be exact.
A lot of communities in southeastern Colorado are dealing with electricity rate hikes, which is no surprise considering that everything is going up. But what caught my attention is that along with a notice about the price increase, the electric companies are telling people how to save money by using less electricity.
One of their suggestions is to set the air conditioner thermostat at 78 degrees Fahrenheit. Since I usually have mine set at 80 if I’m not doing anything but reading, does that mean I’m supposed to raise the thermostat? Wouldn’t that cost me more than leaving it where it is? I might save a few cents on the cost of running the refrigerator but I haven’t found anything that says 78 degrees is a better temperature than 80 for the house and the appliances. And anyway, most of my life I lived without any air conditioning, so 80 is real luxury! Another suggestion was to use the outside grill (which I don’t have) instead of the stove or the oven because it doesn’t heat up the house.
These suggestions aren’t what caught my attention, though. It’s that utilities and other energy providers always pull this stuff — they raise the rates because they’re not making enough, so then they suggest that people use less energy and then . . . guess what?
I don’t need to guess. I know. And so do you if you’re old enough to remember the gas shortages and energy crises we dealt with during the previous century.
What happened back then was that people followed the suggestions and used considerably less energy — fuel for cars, natural gas for homes, electricity — which cut into the profits the price hike was supposed to create. That meant the energy companies ended up losing more money than if they hadn’t raised the rates in the first place. So they raised the rates again.
That seems to be what is happening now. And as history shows, by the time the cycle ends, no one is happy, and we end up paying way more for less.
I was being ironic with that “lucky us,” but if you forget the cost of the energy, we are lucky that we have such things as refrigeration, lights, hot water, air conditioning, and heat, though I don’t even want to think about the furnace during these incredibly hot days we’ve been having.
Still, it is amusing (somewhat) to see history repeating itself.
Pat Bertram is the author of intriguing fiction and insightful works of grief.
July 9, 2022 at 10:12 pm
There’s a truism in the commodity markets generally, and energy markets in particular – “the cure for high prices is… high prices”. I remember the high and increasing prices through the 70s. As prices got (and stayed) high though, demand was contained, supply eventually caught up, and prices crashed. I remember being in Dallas on business in the mid-80s to see for myself all the “see-through” buildings there, built to accommodate a continued boom that went bust instead. There were a lot of corporate near (and actual) death experiences in the process.
I remember crude oil futures prices going to less than zero just a couple of years ago, as storage nearly reached capacity with low demand at the start of the Bob. There would have been more near (and actual) death experiences, but for government intervention. People tend to get risk averse under such circumstances, setting the stage for the next iteration of the cycle.
My son works in IT for a company that does proprietary electricity futures trading, and we’ve had some interesting conversations about that market. In some ways it’s more complex than other energy markets, but it boils down to the same supply/demand balance. It won’t be the same as the 70s-80s, but it will likely be more similar than different.