Ed. Note: Five years ago, Storm Uri caused Texas’s centrally planned wholesale electricity market (ERCOT) to buckle, vindicating warnings about the state’s wind/solar reliance. The mainstream media implicated natural gas instead, failing to explore the why behind the why. Rather than deregulation, Texas post-Uri has chosen to add wind, solar, and batteries, while subsidizing natural gas plants to counter intermittency. This duplicated grid is now driving rates up in a state that could have relied on surplus natural gas instead.
It was not so much the story of freak weather triggering a market failure writ large. It was a classic application of the political economy of government intervention: the seen and the unseen, expert/regulatory failure, and unintended consequences. Don Lavoie, a preeminent thinker in the field of market-versus-government planning, once warned:
…If the guiding agency is less knowledgeable than the system it is trying to guide—and even worse, if its actions necessarily result in further undesired consequences in the working of that system—then what is going on is not planning at all but, rather, blind interference by some agents with the plans of others.”
Ed. Note: This week features four posts on the Great Texas Blackout of February 2021, the greatest mal-coordination in U.S. energy history. Today’s introduction is followed by 1) a blackout prediction that came to pass; 2) the fallacy of market failure; 3) a 2025 MasterResource blog recap of the debate; 4) a 2025 IER blog recap of the debate.
Market failure or government failure? The Great Texas Blackout of February 2021 (five years ago) is a case study that will forever be in debate. Why? Because the counterfactual–a real free-market in electricity–was not present (versus ERCOT et al. statism).
Still, never before had a “market failure” of this type occurred in the U.S. electricity market, not even in the late 19th and early 20th centuries (the free-market era) when the technology to prevent blackouts was much more primitive.…
“For a while, let’s eat a cold dinner here and there. Continuity costs too much. Climate change kills, and it kills vulnerable people first. Intermittency saves lives, and it saves vulnerable people first. Let the pause take its place in continuous climate activism. (David Hughes, below)
In case you missed it (I did), here is a trial balloon from several years ago for us (normal folk) to accept the shortcomings of wind and solar and promote power outages as social policy. Rich and poor. Brown, black, white. Old and young.
“To Save the Climate, Give Up the Demand for Constant Electricity,” by David Hughes (Boston Review: October 2020) came with the subtitle, “Waiting to ensure uninterrupted power for everyone as we transition away from fossil fuels will cost too much time—and too many lives.”…