If you haven’t noticed, I’ve been writing more stories lately about the cost of things. Inflation has been in the news obviously, but more importantly, I keep getting bills that seem really high. Like $710 energy bill high. Or $500 round-trip flight to Memphis high. As a curious person who also doesn’t like paying bills, I decided to dig into the longterm factors that have made things like electricity and airplane tickets so expensive right now. As I found out in my two most recent stories, the answer has to do with deregulation (Stay with me here!):
Blame the Airlines for American Inequality
Why Your Energy Bills Are So High Right Now.
Deregulation may sound boring, but a less boring way to put it is that it allowed companies to really pursue capitalism without any limits. Which is, of course, how a free market economy works. But before the 1980s, there were certain industries, like commercial air travel and electricity, that the government figured it had to oversee, lest corporations trample over the little guy in their zeal for profit.
Let’s take the airlines first. Before airlines were deregulated in 1978, a government agency told them where they could fly and what they could charge. Then, with deregulation, the government decided that it would stop telling airlines what to do. They could compete against one another, and the free market would determine prices and routes and whether it’s ok to charge people for every last thing including a window seat.
Deregulation arguably lowered fares—but maybe not, since it happened around the same time that fuel got much cheaper—but it also allowed airlines to stop serving lots of cities that had gotten used to having air travel. The airport in Memphis, for instance, had 4.6 available million seat miles in 2002 and just 1.8 million by 2019.
You might argue that airlines shouldn’t have to serve cities that aren’t making them money, but there are bigger economic implications. When cities lose air service, they lose the Fortune 500 companies whose employees need to be able to travel without losing a whole day, they lose tourists, they even lose the remote-work crowd who wants to go on Bleisure (yech) travel. And their economies suffer. Here’s a chart I made for my most recent story that I didn’t end up using:
Loss of air service isn’t the only thing that hurt the red regions economies, of course, but it sure didn’t help. Read more here:
Blame the Airlines for American Inequality
Deregulation is also arguably what led to my $710 electric bill. As someone who lived in California for a long time, where some of my apartments didn’t even get heat and some didn’t get air conditioning, the amount of money we are paying on energy on the East Coast is starting to get to me. It seems like every week, I get a new bill for oil or electricity or water or something else that I thought I was really good at conserving.
There are some other factors in this, of course—the oil that heats my house comes from Qatar or overseas rather than Texas because of an obscure U.S. law called the Jones Act. The transition to renewables is going slowly because cities keep voting down transmission pipelines and other projects in their backyards. But my biggest bill came from electricity.
I wanted to blame Central Hudson, the utility that sends me the bills. But Central Hudson can only buy and sell electricity from New York’s state marketplace, the NYISO, which was created after New York deregulated electricity in the 1990s. Rather than a state regulator ensuring that prices are fair, the NYISO’s market is determining prices. Which also means that it’s the market, not one utility, that determines whether it’s worth it to invest in renewables or keep doubling down on natural gas and oil.
The story goes into much more about what is driving energy prices right now. Read it here:
Why Your Energy Bills Are So High Right Now
I also joined NPR’s The Indicator in late December to talk about modular housing, the terrible productivity of the construction industry, and, of course, things getting more expensive these days. You can listen here: