Did Enron Pillage California?

Revelations this summer about Enron Energy Services' byzantine electricity-trading practices have fueled charges that merchant power producers and traders artificially engineered the California electricity crisis of 2000-01. A careful examination of the suspect trading practices, however, reveals that there's less to those charges than meets the eye. The trading strategies in question all involved the pursuit of arbitrage opportunities, which arise when price discrepancies exist for a commodity in different locations or time periods. Exploiting arbitrage opportunities generally enhances economic efficiency by ensuring that electricity is reallocated where it is needed most. While some of the arbitrage opportunities were artificially manufactured by the companies themselves (in ways that may or may not have violated the law), most of them arose as a natural consequence of the market structure imposed by the California political system. In any case, it's unclear whether the trading strategies in question actually served to increase prices on balance. Even economists who are convinced that they did contribute to the increase in electricity prices attribute only about 5 percent of the alleged overcharges to the strategies at issue. Most of the price spike of 2000-01 is explained by drought, increased natural gas prices, the escalating cost of nitrogen oxide emissions credits, increases in consumer demand stemming from a hot summer and then a cold winter, and retail price controls that prevented market signals from disciplining producers or consumers. The price collapse in the summer of 2001 stemmed from a reversal of those conditions, not the imposition of federal price controls or the elimination of the trading practices in question

Don't Increase Federal Gasoline Taxes - Abolish Them

Many experts believe that gasoline taxes should be increased for a variety of reasons. Their arguments are unpersuasive. Oil is not disappearing, and when it becomes more expensive, market agents will substitute away from gasoline to save money. The link between oil price shocks and recessions, although real in the 1970s, has been much more benign since 1985 because of the termination of price controls. Market actors properly account for energy costs in their purchasing decisions absent government intervention. Pollution taxes, congestion fees, and automobile insurance premiums more closely related to vehicle miles traveled are better remedies for the externalities associated with automobile travel than a simple fuel tax. Gasoline consumption does not necessarily distort American foreign policy, impose military commitments, or empower Islamic terrorist organizations. State and federal gasoline taxes should be abolished. Local governments should tax gasoline only to the extent necessary to pay for roads when user charges are not feasible. If government feels compelled to more aggressively regulate vehicle tailpipe emissions or access to public roadways, pollution taxes and road user fees are better means of doing so than fuel taxes. Regardless, perfectly internalizing motor vehicle externalities would likely make the economy less efficient -- not more -- by inducing motorists into even more (economically) inefficient mass transit use. The arguments advanced against increasing gasoline taxes are applicable to the broader discussion about America's reliance on oil generally. The case for policies designed to discourage oil consumption is nearly as threadbare as the case for increasing the gasoline tax -- and for largely the same reasons

Rethinking Electricity Restructuring

Electric utility restructuring was initiated in the 1990s to remedy the problem of relatively high electricity costs in the Northeast and California. While politicians hoped that reform would allow low-cost electricity to flow to highcost states and that competition would reduce prices, economists wanted reform to eliminate regulatory incentives to overbuild generating capacity and spur the introduction of real-time prices for electricity. Unfortunately, high-cost states have seen little price relief, and competition has had a negligible impact on prices. Meanwhile, the California crisis of 2000-2001 has led many states to adopt policies that would once again encourage excess capacity. Finally, real-time pricing, although the subject of experiments, has yet to emerge. Most arresting, however, is the fact that restructuring contributed to the severity of the 2000-2001 California electricity crisis and (some scholars also argue) the August 2003 blackout in the Northeast, without delivering many efficiency gains. The poor track record of restructuring stems from systemic problems inherent in the reforms themselves. We recommend total abandonment of restructuring and a more thoroughgoing embrace of markets than contemplated in current restructuring initiatives. But we recognize that such reforms are politically difficult to achieve. A second-best alternative would be for those states that have already embraced restructuring to return to an updated version of the old, vertically integrated, regulated status quo. It's likely that such an arrangement would not be that different from the arrangements that would have developed under laissez faire

High-throughput genomics and the Sword of Damocles

Computing Infrastructure and Informatics to Support Life Sciences R&D, Therapeutics, Diagnostics and Economic Development PanelNext-generation sequencing and high-throughput assaying technologies have dichotomized entire research communities into those individuals who have rapidly evolved in response to the technological selection pressure and those destined to become evolutionary dead-ends. The problem lies not with the ease with which these technologies may be applied to address a breadth of issues from organismal evolution to variant detection or from quantitation of gene expression and DNA methylation, but the ease with which they generate volumes of data which have never before been experienced by individual investigators. Unfortunately, the pandemic has only just begun and the rate at which data are being generated appears to exceed the exponential increases in computer hardware capabilities described by Moore's law. As a consequence, fewer and fewer investigators will have access to these technologies until user friendly software becomes available at modest price points. However, the problem really is institutional in nature since no institution can afford the disenfranchisement of a large proportion of its life sciences faculty whom are not bioinformaticians or computer systems analysts. Unless universities and corporate research entities rapidly invest in the computational processing and data storage infrastructures and bioinformatics support (personnel and software), their ability to compete within competitive funding and intellectual property generation domains will rapidly wither

Mao with Smart Phones and Internet? A Comparison of Classic Guerrilla Warfare with Fourth and Fifth Generation Warfare Using an Agent-Based Model for Simulation

Fourth Generation Warfare (4GW) theory shares many characteristics of classical guerrilla warfare (CGW) theory in security studies literature. Proponents claim that 4GW is a revolution in war that overturns traditional measures of military power, while critics counter that 4GW is simply CGW in an updated context. Another group posits Fifth Generation Warfare (5GW), which adds additional information-age technologies and uses “any and all means,” (military and extra-military) to attack both the enemy’s will and capability to resist. The irregular subset of 5GW strategies appear to be an extension of 4GW with the addition of advanced information-age technologies: mobile phones and internet spreading propaganda instantly to friendly groups as well as national and trans-national enemies, while unconventional tactics such as suicide bombings and terrorist actions attempt to drain the will of opponents to continue the fight. The CGW and 4/5GW strategies are modeled in an agent-based simulation to evaluate similarities and differences in speed to victory, territory controlled, and the identity of the winning side. Emergent behaviors are compared with historical data. Fourth Generation Warfare (4GW) as conceptualized by numerous military scholars shares many characteristics of guerrilla tactics in the classical military literature of Sun Tzu, Wellington, Clausewitz, Mao, and Giap. Proponents of 4GW claim that its development has significantly altered the ratio of strength of industrialized and guerrilla forces, and thus the likelihood of weaker forces (as measured in previous military contexts) prevailing against forces assessed by traditional measures as stronger. Critics point to a lack of intellectual rigor in defining the salient characteristics of 4GW and charge that it is simply a re-statement of classical guerrilla war (CGW) tactics, albeit with improved communications and propaganda capabilities in a social media cultural context. This research models CGW and 4GW in conjunction with the irregular subset of 5GW in an agent-based simulation using NetLogo software (Wilensky, 1999) in order to explore differences in time and probability of victory and increased area of territory controlled by 4GW and irregular 5GW forces. These forces are then pitted against their respective industrial-age and information-age opponents. Emergent behaviors offer insights into the similarities and differences of CGW. The outputs are then compared to historical data to help answer the question of whether 4/5GW comprise a significant military revolution that threatens to upend traditional measures of military superiority, or they are merely an adaptation of old tactics to a new context. The results generally favored the rebels in both CGW and 4/5GW scenarios. Increasing Red Communications capability in the 4/5GW scenario overall increased Red Territory controlled as compared to the CGW scenario. However, increasing Blue Communications capability also increased Red Territory gained in both models. This could be interpreted that an overall increase in communications capabilities leads to more aggressive tactics and more engagements for both sides. Blue and Red communications in the 4/5GW scenarios are also associated with a decrease in both Red and Blue time to victory, indicating that the pace of engagements is accelerated in the 4/5GW scenarios. Finally, the model comparing identity of victor after 10 years produced mixed results. An increase in Red Communications was associated with a decrease in the log-odds of Blue Victory after 10 years in 4/5GW model, as expected. However, an increase Blue Communications also appeared to be associated with an increase in the log-odds of Red Victory in the 4/5GW model, a somewhat contradictory result. The addition of 21st century technologies seemed to change the overall dynamic compared to CGW only in specific cases, and usually only marginally. The research project was purposefully designed so that the 4/5GW capabilities would be additions to a basic model of guerrilla warfare. There is danger that these additions were simply insufficient in modeling the true extent of the differences between the two concepts of war, and that 4/5GW tactics are, in fact, revolutionary and not evolutionary. Further study is required to answer the question conclusively