If you remember that terrible “energy crisis” in California a year or so ago, then you may also recall that everybody who is anybody had a strong opinion about its causes and cures. Actually, most members of the opinionated elite were promoting the same conservative certitudes: They exonerated the likes of Enron, blamed environmentalists and regulators, and mocked any hint of market manipulation by the energy industry.
As of last week, however, with the exposure of internal Enron documents that describe the market-rigging strategies nicknamed “Fat Boy,” “Death Star” and “Get Shorty,” we have a clearer idea of what really happened. Now we have seen proof, in memos written by Enron’s own lawyers, that the West Coast energy crisis was exacerbated by the powermongers, perhaps by criminal means. Now we know about the trading schemes used by Enron to game the California system, even at the risk of dangerous blackouts. Now we are learning that deregulation permitted Enron, and apparently other firms, to “launder” electricity and falsify congestion on the power grid, in order to rob tens of billions of dollars from California consumers and businesses.
So we also know now that those dominant voices in the media, braying about the infallibility of the market, were loudly, confidently and completely wrong. And who were they again?
Aside from the nation’s conservative editorial pages-which is to say, most of them-the defenders of the energy traders rampaged across the op-ed columns and magazine pages. Texas Monthly reassured the home folks that Enron and Reliant Energy were innocent, deriding California as “whine country.” Oil & Gas Daily agreed that the Californians themselves were “the real culprits in the energy drama.”
In the Washington Post , Charles Krauthammer assured readers that only “silly” Californians “think that the rolling blackouts are a conspiracy by the power companies to raise rates.” And William Safire, in an almost incomprehensible column that termed the rise and fall of prices “as natural as breathing,” warned that “populist interference with the [electricity] market’s self-correction would lead to worse shortages and rationing, to inflation and wage control.” That was a scary prediction from the sage of The New York Times -and also utterly, totally, ridiculously wrong.
On Capitol Hill, the Republican politicians rose up, always quick to protect a generous donor. Among the most outspoken was Senator Larry Craig of Idaho, who attacked California’s elected officials as “conspiracy theorists” for alleging manipulation by the power suppliers. “They are either unconscionably ignorant, or they are unconscionably and deliberately lying,” he said.
And from the White House came the pronouncements of Mr. Energy himself, Vice President Dick Cheney, who sternly lectured the California Democrats as they pleaded for relief from the federal government. “We get politicians who want to go out and blame somebody and allege there is some kind of conspiracy, whether it’s the oil companies or whoever it might be, instead of dealing with the real issues,” he groused. (To Mr. Cheney the “real issues” were not Enron’s market-rigging, of course, but the industry’s demands for more tax breaks, further deregulation and permission to drill wherever they please.)
A more cheerful dismissal was heard from Kenneth Lay, then still revered in the Oval Office as “Kenny Boy.” Brimming with hubris, the Enron chairman patronized his company’s suspicious victims in a Nightline interview: “Every time there’s a shortage or a little bit of a price spike, it’s always collusion or conspiracy or something. I mean, it always makes people feel better that way.”
In light of the recent revelations about Enron, it is amusing indeed to review what Mr. Lay and his defenders had to say last year. But there is more to this story than the usual warning to innocent news consumers, who might make the mistake of believing what they read or hear from the anointed wise men.
The chief exponents of the perfection of deregulated markets are in the Bush administration, which continues to propagate that same ideology without regard to the realities exposed by its own appointees in the Federal Energy Regulatory Commission. Mr. Cheney and the President he advises on energy issues both resisted the imposition of federal price caps in California. They only gave in because of political realities that might have wiped out the remaining Republicans in the Golden State’s Congressional delegation. Had the Senate not shifted to Democratic control around the same time, the White House might have allowed California to continue to suffer.
That’s why past disasters on the West Coast are relevant to this year’s midterm elections, and the Presidential election to come. The shape of the nation’s energy economy is yet to be resolved, and the California debacle has done nothing to shake the confidence of those who are truly responsible. The agenda of pillage and pollution promoted by Ken Lay and promulgated by Dick Cheney remains the same. But they were wrong then, and they’re wrong now.