Quote of the day: Greg Palast
“Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers. And unlike Arnold Schwarzenegger, Gov. Gray Davis stood alone against the bad guys... “
I have to disagree with Greg Palast on this. Gray Davis bought 40 billion dollars worth of energy at the absolute peak of the price, and didn’t hedge. As Peter Camejo has pointed out, if Davis had been a CEO that did something that lunatic, he would have been fired.
So, California now must pay inflated prices for energy for years to come. Giving the energy companies a windfall profit is not standing up against them.
And all Davis had to do was hedge. A hedge is a side bet that prices will fall, done with options or futures. As prices fall, the bet becomes worth more. A small hedge could have saved California billions of dollars.