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CAUSE & EFFECT: The real-life consequences of rigged energy markets

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When Big Business is allowed to rig markets, the result is often a crushing blow to average consumers. There's a perfect example of that this week on energy issues. The oil companies, of course, call this "free market capitalism" - but it is anything but. What it This is really just artificially distorting the market to maximize profits, and bleed consumers dry. At the very least, Alaska regulators are pushing for a crackdown - but this really shows you exactly what the real-life consequences are when we allow corporate power to run roughshod over everything else.

CAUSE:

"An Alaska state authority charged that BP PLC and Exxon Mobil Corp., the world's largest publicly traded oil companies, are conspiring to withhold natural gas from U.S. markets and reinforce their market power over North Slope supplies. In an antitrust suit filed late yesterday in federal court in Fairbanks, the Alaska Gasline Port Authority alleged that a series of illegal agreements and acquisitions by the companies has choked the flow of the state's vast gas reserves. It seeks to stop the companies' alleged collusion through a court injunction and unspecified damages...The dispute comes at a time when U.S. natural-gas prices are soaring....The Alaska Gasline Port Authority said that BP's refusal to agree to ship its natural gas and Exxon Mobil's failure to develop its huge fields amounts to 'warehousing' a desperately needed resource in an effort to drive up prices. 'Gas prices are at record highs, and big oil companies still won't move the gas to market,' authority Chairman Jim Whitaker said in a statement."
- Wall Street Journal, 12/20/05

EFFECT:

"Electricity rates for more than two-thirds of Southern California Edison's customers will rise as much as 18% in the new year, the company said Tuesday...The utility said the first increase, to take effect Jan. 1, would stem in part from higher natural gas prices...Natural gas prices, the key force behind two of the three Edison rate increases, are expected to push up electricity and heating bills across the state."
- Los Angeles Times, 12/21/05
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David Sirota is a full-time political journalist, best-selling author and nationally syndicated newspaper columnist living in Denver, Colorado. He blogs for Working Assets and the Denver Post's PoliticsWest website. He is a Senior Editor at In These Times magazine, which in 2006 received the Utne Independent Press Award for political coverage. His 2006 book, Hostile Takeover, was a New York Times bestseller, and is now out in paperback. He has been a guest on, among others, CNN, MSNBC, CNBC and NPR. His writing, which draws on his (more...)
 

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