Arnold Kling

California Energy Price-fixing

Arnold Kling, Great Questions of Economics
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Back when the California energy crisis was news, Paul Krugman said that there was price-fixing going on, and that this showed that the Texas oil industry is evil. This story has good news and bad news for Krugman. The good news is that there is evidence of price fixing. The bad news is that the party responsible was not from Texas. turns out that the state-created Independent System Operator, or ISO, was the one rigging the price of power, not the evil private generators who everyone suspected.

As of now, the state government is more involved than ever in the California energy market. What does this suggest about the possibility of another energy crisis there this summer?

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