Brownout
Brownout StocksWhat happens when you don't build more power plants? Get ready for spiking electricity rates, brownouts and even blackouts as demand soars
If you think runaway oil prices are upsetting, just wait for what's in store for electricity. Similar forces are in play. Demand is rising fast; supply is not. The cost to get coal and natural gas out of the ground is going up, and to that expense must be added the cost of the carbon permits that Congress and the presidential candidates are contemplating. Environmentalists are getting power plants scotched. China is sucking up energy. Leave such dynamics in play long enough, and price spikes in electricity follow. But that's just the beginning. We may be facing brownouts (voltage reductions) and even rolling blackouts.
By as early as next year our demand for electricity will exceed reliable supply in New England, Texas and the West and, by 2011, in New York and the mid-Atlantic region. A failure of a power plant, or a summer-afternoon surge in the load, could make for a blackout or brownout. "There really isn't any excess in the system," says Rick P. Sergel, chief executive at the North American Electric Reliability Corporation (NERC)....MORE
...Do you remember what happened when the government tried to repeal the laws of economics in 1973 and 1979? If the price of gasoline needs to be $2 to make supply match demand, but the price is set at $1 by decree, drivers just pay the other dollar in an indirect way. That's how much of their time and their fuel they will burn up waiting in line with motors idling.
We'll see the same kind of waste when electric power runs short. Desperate to avoid disruptions, businesses and even homeowners will buy backup generators. These appliances are guaranteed to spew more carbon into the air than the coal plants that could have replaced them.
Rather than curse the darkness, invest in government mismanagement. There aren't any good pure-play stocks in backup power, but Cummins...MORE
