With the recent market movements, perhaps we can now take a fresh look at energy policy and regulation.

Underlying the old thinking is the illusion of capitalist market forces in our energy system.  Yet, the “market” for crude oil is no balanced market at all – it is a supply chain.  The movement of product from drilling to the gas pump is not governed by the type of market forces where sellers and buyers achieve a balance based on a culmination of millions of individual selling and buying decisions.  Allowing the energy producers to use free-market language is damaging to our society.

• There is tacit agreement among supply chain participants to raise prices.  Everyone except for the invisible end-consumer has an interest in allowing underlying price inflation.  Not just speculators – I am no believer in the ability of any organized strategy to disrupt a segment of the economy like energy supply.  However, speculation is in the mix.
• There is no transparency, in each stage of the process and in the transactions that form the ups and downs of the price.
• There is inelastic demand.  We have little choice in the short or medium term but to just pay the listed price.
• The timeframe – from ground to pump, and all the steps along the way, defeat the idea that there is a marketplace between sellers and buyers.
• There is no voice of the consumer in the process.  There is no negotiation here.  No compromise.

We need to move beyond a language that serves suppliers, and get back to the reality that we as a society are ill-served by the current system.