Paying too much for natural gas? Blame Enron
Today, the Senate passed the Farm Bill. Much can and will be written about the benefits and problems this mammoth piece of legislation will inspire. The $307 billion farm bill however does much more than grant subsidies to farmers and provide funds to nutrition programs like food stamps. In a small dark corner of the bill is an important piece of reform legislation that deals, not with food, but with natural gas prices. Let me explain.
If you use natural gas at home, you’ve probably noticed that your bills have been getting bigger. In some parts of the country they’ve almost doubled in the past six years. You might assume that rising gas prices are the stuff of Econ 101: Gas reserves in the Gulf of Mexico are dwindling, the cost of crude oil is sprinting upward, creating demand for other energy sources and hurricanes Katrina and Rita damaged refineries, cutting supply and jacking up prices. But what’s partly behind spikes in your gas bills are the financial traders who capitalize on a dysfunctional regulatory system and an energy market that’s devised to confound consumers.**