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 murder." 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 companies. "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 1992. 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