The dike broke this week. Energy price controls are back.
Californians are paying more for electricity than they find comfortable. Democrats are in control of Congress.
And adults who should know better are discussing price controls for electricity.
Under relentless badgering from California Democrats, the Federal Energy Regulatory Commission began this week to act hospitable to the caps on wholesale electricity prices that it has heretofore resisted.
Republican House members urged FERC to expand the oversight role it has assumed for wholesale power prices in California to all of the US West for the rest of the summer (OGJ Online, June 13).
And Senate Republicans are wavering.
The Wall Street Journal quoted Sen. Susan Collins (R-Me.) as saying "short-term, carefully constructed price caps seem reasonable under the circumstances."
Of course they do. Easy-feeling fixes always seem reasonable.
But price controls are never reasonable. They're political candy and economic poison.
The pressure to impose price controls always emerges when markets need them least: when prices are elevated by shortage.
Under those conditions, markets need more supply and less consumption.
Price controls produce the opposite.
This isn't some untested economic hypothesis. It's historic fact.
Government price controls and the allocation mandates that must accompany them created oil shortages in the 1970s.
Price controls kept the interstate natural gas market susceptible to shortage, by coaxing supply into intrastate markets, for 50 years.
The government came to its senses in the late 1980s. And the decontrolled decade just past was one of energy plenty and economic prosperity.
Apparently, US lawmakers in numbers large enough to cause problems are either too old to remember the bad old days or too dense to learn from the past.
Too bad. They acted ready this week to unleash a beast they'll regret if it does get loose.
Price controls never work. They always create unanticipated distress. They always drag the government deeper into markets than even US lawmakers think it should go.
And they are never warranted. Not even for California. Not even a little bit.