Asking for Conservation
Have you ever heard of government authorities making public statements around Valentine's Day to please conserve on roses since we are entering our peak demand season for them and rolling shortages could ensue? No? Never? Well, the demand spike for roses on Valentines is much more dramatic than the demand spike for power on a hot summer day. So why no urgent government messages for conservation of the former but constant ones for the latter?
Because the rose market is not heavily regulated. Producers are free to manage their capacity without government interference, and, perhaps more importantly, producers are free to charge peak pricing in high demand periods. In fact, prices for roses on Valentines go for a multiple of everyday pricing that a similar differential in a peak supply period at, say, a gas station would likely get the proprietor arrested for price gouging. But we recognize that its tough to manage a business to supply all its capacity in one day of the year, and accept the higher pricing. Why is it we can't accept the same facts of life in electrical generation, where capacity is orders of magnitude more expensive to manage than rose growing?
More from Llewellyn Rockwell at the Mises Blog and Lynn Kiesling at the Knowledge Problem
