CALIFORNIA MOVES TO CRIMINALIZE ENERGY PRODUCTION

If a government outlaws business behavior, business subject to its laws will go away.

If a government outlaws business behavior, business subject to its laws will go away.

This proposition is not difficult to understand.

Except in the California state house.

The Assembly Appropriations Committee has passed legislation that would make it a felony for natural gas producers and operators of cogeneration facilities to sell energy at more than "marginal cost," whatever that is (OGJ Online, July 12, 2001).

The move is a response to allegations that during California's energy crisis, producers deliberately withheld supply in order to raise prices.

So to ensure that energy companies produce energy during shortage-to conduct business, in other words-California will make it a felony to conduct business.

This gives new meaning to the overworked phrase "self-defeating."

The bill also would outlaw any intentional curtailment of production-including, apparently, idling a well in response to market conditions.

And it would offer financial rewards to nonprofit groups and trial lawyers for reporting allegations of "price gouging" to the state attorney general's office.

The law originally covered oil and coal. Amendments at the committee level removed those provisions, indicating that somewhere in California politics resides some measure of sense.

Even with the scope limit, the measure is plenty dangerous.

Sure, everybody's on edge in California because of the crisis. But whatever happened to clarity of thought under pressure?

The bill shouldn't pass. The broader vetting it will receive before the full Assembly will raise chances for adult judgment to prevail, California's penchant for strange behavior on energy notwithstanding.

Whether or not it becomes law, however, the legislation reflects a destructive antagonism toward energy production that someone in California needs to get under control.

It is natural for consumers to dislike, even to be angered by, spiking prices for energy. It is something else to automatically assume the worst about sellers every time it happens.

The fact is that people conducting business-any business-always seek the highest price they can charge and still achieve sales. And people conducting business-any business-always avoid loss, which sometimes not selling.

That's business.

An orientation antagonistic to those realities already has made California an abnormally risky place in which to produce energy. The state is paying the price for it now.

The new legislation would just make things worse, and in some cases possibly impossible.

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