Lax Oversight Blamed for High Gas Prices (AP)

[Starfury]

(...)

The officials — all Democrats — issued a six-month study of natural gas prices. They said they want to debunk the commonly held view that a lack of supply and surging demand are responsible for sharp price increases that have caused a 25 percent to 30 percent rise in winter heating bills in the Midwest and elsewhere.

"It's stunningly annoying to sit here and have to literally say the moon is not made of green cheese," Missouri Attorney General Jay Nixon said at a news conference. "Supply and demand did not cause the spikes."

The price surge has affected more than half of all U.S. households that heat with natural gas. Many of those who rely on electric heat have also seen bills go up because a large number of power plants run on natural gas.

While natural gas prices are up about 28 percent this year, usage is down 5 percent. At the same time, supply has remained steady.

(...)

http://news.yahoo.com/s/ap/20060307/ap_on_bi_ge/midwest_gas_prices

[Betsy Ross]

1. So this means

that people went without heat or without food or medicine to afford heat for the sake of coporate profits? Naw, not in America. (Don't know how to put the sarcasm icon, if you needed reassurrance.)

[TechBear_Seattle]

4. How to put the sarcasm icon

Above where you add your message is a section labeled Message options on the left. In that section is a link, Smilies lookup table. Click that link. If you are not using a pop-up blocker, a small window will appear, giving all the emoticons.

To add one, put the carat (that blinking line) where you want the emoticon to be, then go to the smilies window and click on the emoticon picture you want to add. The appropriate text will be inserted at the carat. Or you can copy the text and paste it in where you want.

:hi:

[Betsy Ross]

7. Thanks.

:bounce:

[The_Casual_Observer]

2. We lived through this in Calif already. After jr was selected, it has

been a free for all for all those Texas energy bastards.

[RUMMYisFROSTED]

3. Could it be a scam?

[megatherium]

11. It could be a scam but natural gas prices even at $6 or $7

are much higher than they were just a few years ago. There is a shortage of natural gas (regardless of the demand and supply right now); prices are high -- and very volatile. This is a characteristic of commodities that are becoming scarce: prices gyrate. (Demand might drop because of such high prices, but as prices then go back down, demand goes up, sending prices back up.)

The important point: we are already past peak on natural gas.

[RUMMYisFROSTED]

13. Look at profits.

Although I agree that we're at, near or past Peak, record profits indicate a scam is afoot.

[Mountainman]

14. What explains the increase in profits?

I believe that there is a fixed demand and the price is manipulated. The market rules don't apply to energy. There is no alternative and there is no ability to opt out of the market. The only way demand is lowered is by people not being able to pay the price. They have to do without.
This just has to be something other than supply and demand causing higher prices.

[megatherium]

21. Demand is by no means fixed.

People lower their thermostat. They put on thick sweaters. They get triple-pane windows or put more insulation in their walls and attic. There are alternatives: when I replaced my furnace/air conditioner five years ago, I chose a natural gas furnace over a heat pump. Perhaps I chose wrong.

Short term manipulations I'm sure do happen. But bear in mind this kind of crap can only happen if there is not a lot of surplus capacity in the system. Natural gas used to be abundant, it cost only cents per unit; now it costs $6 per unit or more.

[Mountainman]

22. The demand change is negligible and has no effect.

People have to drive, they have to heat their home and water and cook. The cannot easily say, the price is high I will use an alternative to gas or I will not buy gas. Sure you can reduce your usage but not enough to have the effects on price we are seeing. Also there are few suppliers.

For market forces to work as stated, there has to be many suppliers, elasticity of demand and the presence of substitutes. The energy industry has worked to make the market forces ineffective. It has all to do with manipulation of commodity markets by such tactics as using fear of loss of supply which forces prices of futures up. There is a bidding war and we pay the price.

[RUMMYisFROSTED]

5. "We remain comfortable with the level of oversight

provided by these regulatory agencies." - Sandy Crockett, a spokeswoman for the Natural Gas Supply Association


I bet you do, Sandy. I bet you do.

[Coastie for Truth]

6. Check these out--

1.

2. An Introduction to Economic Geology and Its Environmental Impact by Anthony M. Evans - a good intro to economics of geology for non-economists and non-geologists.

[FloridaPat]

8. Wasn't there a problem with the pipelines after Katrina hit the Gulf?

I thought that was why they said the prices were going up way back when the hurricane hit.

[Starfury]

9. Apparently that was something of a myth:

Wisconsin Attorney General Peg Lautenschlager said the report was commissioned before the hurricanes struck and took them into account. The report found the storms actually had little impact on supply because natural gas storage was at or near record levels both before and after the hurricanes struck the Gulf Coast.

So according to the Attorneys General: Nope, just another excuse put forward by gas companies to screw us, the consumers.

[FloridaPat]

10. I had a house heated by natural gas in Syracuse, NY in 1980.

Reagan decided to deregulate natural gas. The monthly winter bills went from $75 to $350. I'd hate to think what they are today.

[apnu]

12. dupe

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2152261

[Javaman]

15. oil changes 3 dollars in either direction, but gas still goes up....

funny how that works huh? I predict that by this summer we will see 3 bucks a gallon again at the pumps. And this is a very low estimate.

[leQ]

16. Traders blamed for high heat bills; regulations urged

Forget the theory that short supplies and high demand, with an extra punch from two hurricanes, drove up the price Iowans paid for natural gas this winter, Iowa Attorney General Tom Miller said Tuesday.

Miller and attorneys general from three other states said a six-month investigation found that the increases resulted from commodities trading that drives up prices in volatile, highly uncertain natural gas markets.

(snip)

The attorneys general said journalists had perpetuated the myth that gas supplies — affected in part by Hurricanes Katrina and Rita — were low and that prices therefore rose. "We felt this left much unexplained" and was harming consumers, said Wisconsin Attorney General Peg Lautenschlager.

Missouri Attorney General Jay Nixon said supply and demand have been relatively flat during the past decade, while prices have been on a roller coaster. Even a freshman economics student would find "it is obvious something is going on." Production continued despite the hurricanes' impact, he noted.

The Des Moines Register

did ya see that? "journalists perpetuated the myth" as if that's news to us. but the report is easy to understand. contracts for gas, not gas itself, is what escalates our costs. and since there is little regulation on the deal, well.... remember enron?

[shoelace414]

17. We can do something about this IF

Democrats take the house and sente in 2006

[Demeter]

18. Surprise! Surprise! Guess That's Why We Had Regulations!

And that's why Reagan and BushCo wanted to deregulate! Funny how that works.

[NYC]

19. Recommended.

This needs publicity.

[sybylla]

20. So nice to see my AG in the thick of things

If nothing else, the judicial checks on this country may yet be able to shame DC into protecting the people.