The Guardian May 23, 2001

Deregulation causes energy crisis

by Fred Gaboury

CHICAGO: Lucinda Ware, an 84-year-old woman living on Chicago's South Side, 
has an income of just over US$700 a month. She got a US$440 bill from 
People's Gas for the (winter) month of December.

Ware, one of the 85 percent of Illinois homeowners who depend on natural 
gas for heat, hot water and cooking, said she would be able to scrape up 
enough money to pay that bill. But she wondered what she would do the next 
month, which she fears, will be 40 percent higher.

There have been other increases as well: heating costs for Chicago public 
schools are up US$7 million, 50 percent more than called for in the budget.

More than 100,000 more families are receiving emergency assistance from the 
Low Income Home Energy Assistance Program compared with a year ago.

For People's Gas: a 55 percent increase in quarterly net income as cold 
weather, low inventories and deregulation combined to drive up heating 
costs in Illinois and throughout the Midwest.

Nor is People's alone in its good fortune. With what the "Wall Street 
Journal" called "unusually" high oil and natural gas prices and strong 
profits from their refinery operations, the nation's largest oil and 
natural gas companies racked up obscene fourth-quarter profits last year.

Exxon Mobil set a record with a fourth-quarter profit of US$5.2 billion;

Texaco Inc said its quarterly profits were a record, while Chevron Corp 
said 2000 was the most profitable year in its history.

BP Amoco, the British/US energy conglomerate, made a fourth-quarter profit 
of more than US$1 billion from natural gas sales in the US.

In a telephone interview, Patricia Clark, associate director of the 
Citizens Utility Board, said, "They are going to have to hide those profits 
somewhere. People paying high energy bills are going to be screaming bloody 

Bob Vondrasek, executive director of the South Austin Coalition, was blunt 
when asked his views on the heating crisis. "Deregulation has turned 
heating our homes over to Wall Street and most States, including Illinois, 
have surrendered any control over outfits like People's Gas."

Vondrasek said he didn't "expect much help" from the Bush administration. 
"After all", he said, "both he and Dick Cheney are from the oil industry. 
That means the first step we have to take if we are going to change things 
is to get organised."

William Abolt, Chicago's Environmental Commissioner, said consumers were 
faced with a deregulated market in terms of gas production but a non-
competitive market place.

"Because of this, gas companies are indifferent about prices while 
producers have no check on what they can charge. You have the worst of all 
possible worlds and it's ripe for price gouging", he said.

Wall Street is well aware of the resentment percolating in the nation over 
high energy costs accompanied by outrageous profits.

Carl Rosen, President of United Electrical Workers (UE) District 11, told 
"People's Weekly World" the crisis "has been created" by the energy 

"They refused to bring new gas on stream because they said the price was 
too low. When it went up they began drilling."

According to industry sources, there are now some 800 more drilling rigs in 
operation than there were a year ago.

Rosen said deregulation of the price of natural gas and lax enforcement of 
the regulations that are still on the books by the Federal Trade Commission 
(FTC) and the Illinois Commerce Commission are responsible for the high 
price of natural gas. "In general, the members of these commissions are the 
same "free market' types who told us deregulation would create competition. 
It hasn't and it won't."

One of the reasons it won't is because utilities have once again begun to 
forge huge holding companies in the years since Congress removed all price 
controls on newly discovered gas in 1978 and President George Bush 
completed the job of deregulation of natural gas with an executive order in 

These actions gutted three New Deal laws, especially the Public Utilities 
Holding Company Act (PUHCA) of 1935, that brought huge holding company 
empires under federal control with the Securities and Exchange Commission 
(SEC) made responsible for its enforcement.

Enforcement has become weaker over the years with the SEC approving more 
than 120 mergers of electric and gas utilities since 1978.

Most analysts believe outright repeal of the PUHCA is inevitable and that 
within a few years a handful of huge conglomerates will control production 
of the nation's electrical and natural gas needs.

* * *
People's Weekly World, paper of Communist Party USA

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