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| Playing Chairman and CEO
by John M. Curtis Copyright May 8, 2001
California’s governor Gray Davis—together with its two U.S. Senators and congressional delegation—have practically begged the White House for temporary price caps. Resisted by Vice President Dick Cheney and Energy Czar Spencer Abraham, the administration opted for platitudes about expanding supply over dealing with the ugly realities of energy shortages—especially in California. “Price caps are not a help. They take us exactly the wrong direction,” said Cheney, still failing to make the transition from corporate CEO to vice president of the United States. Bush and Cheney don’t hold a mandate to protect corporate profits, they took a solemn oath to defend the rights of ordinary Americans—including the right to affordable energy. Yes, it’s the wrong direction for energy companies, but it’s the right move to protect consumers from a hostile marketplace. Unable to switch gears, “The way you address these issues is you either have to reduce demand or increase supply. And anything that doesn’t do that is counterproductive, especially if it takes us in the opposite direction, which to some extent price caps may because they discourage investment,” said Cheney, showing his total denial over today’s deregulation boondoggle. Price gouging and market manipulation are rampant in California, causing widespread shortages, sending prices through the roof, and driving the state closer to bankruptcy. “Ultimately, I think we’re going to be better off if we have a deregulated energy market in this country,” said Chaney, either expressing blinding zealotry or nauseating greed and insensitivity. Hello? Where’s Cheney been while California’s deregulation experiment fell on its face? Neither Cheney nor Bush has reconciled their former corporate careers to see clearly government’s role in stabilizing vital commodities. Would they stand idly by if milk prices went through the roof? Even FERC, bucking the White House’s trend, imposed limited caps and levied unprecedented fines against suppliers guilty of piracy. Energy suppliers won’t end their binge any time soon until the federal government applies the brakes. Blaming California’s current crisis on a failure to build additional power plants only tells part of the story. Prior to deregulation, utilities managed to somehow keep the lights on. More punitive than any income tax, runaway energy inflation robs consumers and threatens to take down the entire economy: There are no loopholes at the pump. Tax cuts won’t help the sagging economy if they are spent on paying exorbitant energy bills. Searching for minerals and drilling in Alaska also won’t solve America’s energy problems if free markets turn into chaos. Rolling blackouts in California are a bitter reminder that free market zealots must climb out of the ivory tower and accept reality. Regulating energy—like the stock market—requires vigilant government scrutiny to prevent human propensities from running wild. Humankind—in whatever endeavor—must play by the rules or face the consequences. Cheney’s wrong when he insists that bridling energy suppliers discourages entrepreneurship. On the contrary: It establishes unambiguous rules by which profit-oriented businesses can flourish and, at the same time, benefit society. Industries that affect the health, safety and welfare of consumers must be regulated. Cheney’s partly right when he blames California for not building enough new power plants in the last 10 years. Where he misses the boat is not recognizing that the now defunct California Power Exchange—the trading venue for energy—promoted a bidding frenzy sending spot prices into the stratosphere. Falling asleep at the switch, the governor and Public Utilities Commission chairwoman Loretta Lynch failed to respond to utilities’ cries that they were running in the red. Putting his head in the sand, Gov. Gray Davis ignored utilities’ pleas until they were nearly bankrupt. When Lynch refused to grant rate hikes, California’s three major utilities went down the tubes. Now she and the governor finally acted to pass whopping rate hikes, hoping that the state’s $15 billion debt could be repaid and bail out utilities. Hiring Los Angeles DWP’s S. David Freeman to negotiate long-term power contracts was a step in the right direction, but that doesn’t make up for the months of inaction leading up to the current crisis. Bush-Cheney were narrowly elected to represent all the people—not just the power elite at publicly traded energy companies. While Cheney talks a good game, he still hasn’t turned the corner from CEO of Haliburton to an elected representative of all the people. When federal regulations are needed, government shouldn’t grandstand about free markets while watching the nation’s most powerful state—and indeed the entire economy—flop in the breeze. “There’s nothing more we can do,” said Bush, sounding an all too familiar mantra, forcing California to swallow a bitter pill. Yes, there are many things that the White House can do, beginning first with making positive public comments to reassure battered consumers. Beyond that, the White House needs to stop shielding the energy industry and start protecting the consumers who put them in office. No longer the chairman and CEO, Bush and Cheney must switch gears and accept the role of helping real people suffering in the current energy crisis. It’s time to abandon free market nonsense and fix the problem. About the Author John M. Curtis is editor of OnlineColumnist.com and columnist for the Los Angeles Daily Journal. He’s director of a Los Angeles think tank specializing in political consulting and strategic public relations. He’s the author of Dodging The Bullet and Operation Charisma. |
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oyalty to free markets and corporate profits shouldn’t eclipse government’s basic role in assuring affordable energy. Tax crusader President George W. Bush favors cutting $1.6 trillion in taxes but doesn’t endorse slashing one nickel off the punitive federal gasoline tax, believing that it would only offer a “quick fix” to the present energy crisis. Nor does he, his Vice President or his Federal Energy Regulatory Commission [FERC], endorse price caps on any type of energy, fearing that price controls would unfairly flog producers by sabotaging profits and incentives to supply energy. Bush’s “focus is on long-term solutions,” said White House Press Secretary Ari Fleischer, casting aside criticism that the administration shows great sensitivity for publicly traded energy companies but little for cash-strapped consumers. With a sluggish economy and skyrocketing energy prices, the White House faces an avalanche of bad publicity. Blowing smoke, “If any politician has a magic wand that they can wave over gas prices to lower them, the president would like to listen to them,” said Fleischer in what’s become his all too familiar flip style.|
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