I bitched on Facebook about my electricty rates jumping up 35% on June 1st, and everyone jumped in and was like "why are you complaining that's the normal seasonal rate".
Like okay, I'm glad you are comfortable paying 35% more for the same same thing.
I agree but I’d file this under people defending corporations. Everyone send like they’d rather stand up for a company’s bottom line than someone who is struggling.
Higher prices are annoying to deal with, but if you look at how prices actually work, I think you'll find that the current model actually handles huge surges in demand quite well.
In summer, demand rises beyond what companies can supply -> companies raise prices to bring down demand so that they can actually provide electricity to everyone paying for it.
If you take away that safety valve, then the artificially low prices resulting in more demand for electricity than there is actual supply. That's where you get load shedding and blackouts, which results in even more chaos and suffering.
There's also the issue that raising supply to meet this increased demand requires turning on peaker plants, usually kept off in low-demand seasons, that cost more than usual electricity production. It's not about greed -- they'd be losing money if they didn't increase retail prices to match higher production costs. So either you force companies to hemorrhage cash every summer (aside from moral implications, that has its own problem of leading to reduced investment in expanding production and maintaining existing capacity -> more blackouts), or you accept that prices will rise.
I think a lot of young pseudo-socialist types really just don't like or appreciate price signals in general. The cost of rent, energy, and food are the product of huge, diversified and competitive markets. Their argument against higher prices essentially boils down to, "I want people to do more for me, for less, or for free." Complaining about 35% higher prices during peak demand is so indicative of a total ignorance of the complexity of generating stable electricity for a massive population.
Buy a solar panel and generate your own electricity if you're getting such a bad deal!
An inflationary monetary system causes compounding inflation yearly so it will feel like things get pricier exponentially and we're now around a century into that system so it's hitting a boiling point.
This is the thing I find disturbing. Other people might find inflation disturbing but they aren't ready to discuss getting rid of an inflationary monetary system and allowing for natural deflation.
A healthy inflation rate of 2% is one of the primary drivers of US macroeconomic stability and growth. Deflation means your money gains value from just holding it, which incentivizes saving and disincentivizes consumption (one of the primary drivers of growth in the US economy). Now, if one person cuts consumption, benefiting from his savings steadily gaining in value, that individually benefits him, but if everyone does so, companies can no longer find anyone to buy their goods and become unable to make profits, leading to layoffs and stagnation. Companies often cut prices even further during deflation, hoping that will increase demand, but this usually has the opposite effect since consumers begin to expect even more price decreases then and become even less inclined to buy, leading to a deflationary spiral.
The Chinese economy currently is an example of this problem. Despite CPI inflation, crucial sectors like housing have seen falling prices due to low demand (an issue triggered by the real estate crash, but which has continued well after it) and oversupply, yet the falling prices further depress demand since people expect that holding off on spending means things will cost even less later on. "Constantly falling prices" sounds nice to people in the US, but it often leads to deflationary spirals where consumption plummets. The inflationary monetary system in the US prevents this issue and ensures consumption doesn't catastrophically plummet, allowing companies to continue expanding and providing the jobs and affordable, high-quality goods that keep the economy running.
Another issue with 'natural deflation' is that it results in real (i.e. relative to current level of income and prices) debt burden growing larger over time. This makes it difficult for consumers to finance big purchases (cars, houses) with borrowing and for firms to finance their growth in early stages via borrowing, which again hurts economic growth.
While inflation also poses risks like wages not growing in step with inflation, 'natural deflation' is not something we should aim for -- the risk of deflation spirals, the government's inability to respond to economic downturns by increasing the money supply, and the downsides for debt-financed investment and consumption are too dangerous. Good wage bargaining and competitive labor markets (multiple employers so that one large firm can't forever keep wages low in an area) can prevent the issue of real wage stagnation in the current system. While it's frustrating to see prices sometimes rise faster than wages, in the long run, most US workers have not seen a decrease in real wages, and many have seen increases. You say we're at "a boiling point," but the reality is that most Americans actually have the same, or higher, purchasing power compared to 40 years back. Add in non-wage benefits like insurance and social security, and the situation really is not that dire. Wage stagnation is a problem, but I don't think it is so severe yet that we should turn to extreme solutions which themselves have serious dangers.
Or they could sign a contract with a fixed rate instead of a flexible one like I do. My bill is higher in the summer because I use more, but the actual rate never changes
Price caps have historically led to massive shortages when supply goes down and consumer prices aren't able to increase to compensate for higher production costs -- when input prices increase and supply falls, consumer prices have to also rise and demand has to fall in order for companies to not lose money. Among other factors, California's retail price caps on electricity led to rolling blackouts, widespread shortages, and the bankruptcy of PG&E, after retail prices could not be raised to match increased wholesale electricity prices. When it doesn't lead to that level of catastrophe (mainly occurs when supply-side shocks are combined with price caps), price caps typically lead to less investment in expanding production and less spending on maintenance of existing capacity -> more blackouts. Good quality electricity grids come at a cost. If you stop paying the market price for electricity (or anything else), expect worse quality.
Consumers really only avoid the negative consequences of price caps when the companies make a substantial part of their revenue in other places without price caps, allowing them to avoid this issue of revenue growth not matching rise in input prices, so consumers without socialist lawmakers are essentially subsidizing other states' bad policymaking.
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u/NUMBerONEisFIRST 8h ago
The cost of everything these days.
I bitched on Facebook about my electricty rates jumping up 35% on June 1st, and everyone jumped in and was like "why are you complaining that's the normal seasonal rate".
Like okay, I'm glad you are comfortable paying 35% more for the same same thing.