Question about the price gouging in Texas that the billionaires are bragging about

[Ferrets are Cool]

I've been through dozens and dozens of hurricanes, all the way back to Camille in 1969. After each one (almost every one) there have been laws that made it illegal to price gouge for anything, including water and gas.
Why are these asswipes being allowed to price gouge during this emergency in Texas?

[Midnight Writer]

1. It's Texas, Jake. Forget about it.

By the way, the plot of Chinatown was about a filthy rich old man scheming to price gouge water.

[hatrack]

2. If I'm following the legal and philosophical underpinnings of this trend correctly . . .

I believe they're citing the doctrine of "Oil Wells Big Hats Teh Alamo!!", upheld by the US Supreme Court in a famous ruling in 1931.

[Bobstandard]

5. OMG! is SO good! N/t

[hurple]

3. Cause in TX

Gov't regulations aren't the solution, they're the problem.

[Bobstandard]

4. That's not a bug, it's a feature

They set up the whole energy delivery mechanism to maximize prices and profits over any other consideration. What you call price gouging, they call success. Today I’m sure they’re reviewing the negative publicity from their failure, giving it a market value, and comparing that to the profits they reap from product scarcity. The smallest positive value they’ll see as a job well done. They’ll pretend to be sorry about the pain rate payers have experienced, while secretly enjoying how well their system worked. Now their only thought is to short circuit any move to change the status quo. Watch they as they roll out the ‘Dems are socialists’ rhetoric.

[Ferrets are Cool]

6. Oh, I've already seen the company that Jerry Jones owns bragging about ALL THE MONEY

this catastrophe is creating for them.

[FakeNoose]

10. Next they buy newspapers and tv stations to control the media

[TwilightZone]

7. Actually, they nail people here for gouging.

I don't remember how many businesses were prosecuted after Hurricane Harvey, but there were tons of them.

They take it take it pretty seriously here, contrary to public belief.

If you see someone gouging, report it:

https://www.texasattorneygeneral.gov/consumer-protection/disaster-and-emergency-scams/how-spot-and-report-price-gouging

Edit: yes, I know that links to that idiot Ken Paxton, but that's where the process starts.

[Ferrets are Cool]

8. ...

Gas from Comstock’s Haynesville wells was sold on the spot market for between $15 and $179 per thousand cubic feet, chief financial officer Roland Burns said Wednesday on an earnings call. That translates to between $15.55 and $186 per million British thermal units.

“This week is like hitting the jackpot with some of these incredible prices,“ Burns said. “Frankly, we were able to sell at super premium prices for a material amount of production.“


A natural gas company controlled by Dallas Cowboys owner Jerry Jones says it hit the "jackpot" in the natural gas surge https://bloomberg.com/news/articles/

[hatrack]

9. Roland Montgomery Burns, one hopes . ..

[TwilightZone]

11. Gouging laws generally apply to prices being charged to consumers.

The prices being reported were being charged between utility companies within the ERCOT system, not to consumers. Energy was being transferred from providers within the system that had it to providers that didn't. The system is linked to scarcity, and energy could not have been more scarce when supply was at 50% of demand.

The prices being reported were also short-term *marginal* prices.

Texas has a cap on short-term prices. Here's how the process works and what the Public Utility Commission did during the spikes.

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/021621-texas-regulators-keep-prices-near-9000mwh-cap-during-rotating-outages

More:

https://spectrumlocalnews.com/tx/san-antonio/news/2021/02/16/state-agency-s-failure-may-cause-electricity-rates-to-rise

All that being said, there are anti-gouging regulations involved in the ERCOT process, and regulators are reviewing the processes to see if they apply.

[Ferrets are Cool]

12. It's difficult to see how these increases will not be passed along to consumers.

But, what do I know?

[TwilightZone]

13. Yeah, could certainly happen.

For some providers, some of it could very well be passed along. But, natural disasters are a known issue and these spikes are part of doing business in areas prone to them, and the bigger providers are more likely to be able to absorb them without big rate increases. Also, most consumers are on fixed-rate plans or plans that have rate caps, and many of them are on yearly contracts, so they won't see increases until they renew, if then.

The ones getting the most attention, of course, are headlines like "Texas man receives $8,000 bill". In his case, he signed up for a variable-rate plan that linked his costs directly to the cost the utility pays. Really, really bad idea and I'm surprised that they're even allowed to offer a plan that like.

Basically, nobody does that anymore, and his situation is exactly why. Variable-rate plans were a major factor in the housing crash. People would sign up when rates were low and then get buried by rate increases. It's a small company with a limited number of customers (thankfully), but I guarantee it's going to get all the press. And maybe go bankrupt.

My guess is that they'll settle with their customers and they'll only pay a fraction of the total, but that's just a guess and assumes they could absorb some of the costs. The company actually recommended that their customers find another provider in the short term.