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Yet Another Exponential Chart... And A Different Spin On "Keynesianism"

Tyler Durden's picture


In our daily scouring of the markets we run across a plethora of charts, many of them boring, some interesting, and a few select ones, exponential, and thus completely unsustainable. The US debt load is of course one of them, global central bank assets is another, as is pretty much everything associated with Europe these days. However, the following exponential chart is one we had never encountered before: it shows the number of major "disturbances", read power outages, in America's power grid in the last decade. The chart is, well, disturbing.

So with fiscal stimulus to fund social projects as one of the core tenets of neo-classical economics, or at least such being its interpretation in Washington, D.C., and New York Times newsroom of course, one wonders if perhaps this is not one of those occasions where it would make sense to incur the social cost to fund infrastructure developments upgrading America's dilapidated power system.

We would be merrily on our way with such blasphemous thoughts until we looked at another chart, this time one showing the "real victims" of power outages, where to our absolute lack of surprise, we find that by far the biggest beneficiary of an operating power system are US Brokerage operations, for whom every hour in power grid downtime results in a cost of a whopping $6.5 million.

Which then begs the question: since brokers, read High Frequency Traders, investment banks, and other operations that require copious amounts of electricity to run "arbitrage" and other "sensitive" information driven profitability schemes on a millisecond basis, are the ones benefitting the most from a well-greased power grid, should it be the onus of Joe Sixpack, in the form of yet more indebtedness, to fund a system whose benefits are so disproportionately skewed to the benefit of one specific class of consumers.

Perhaps it is the banks, who are so very reliant on an up to date electrical utility system, that should be the ones funding on a pro-rata basis in terms of benefits, or well over half, the modernization of such facilities. After all, following the mass bailout of all banks, these entities are already, pardon the pan, utilities themsleves... or at least would be if the bailouts had been executed properly, and any excess profits were solely to the benefit of those who provided the bailout cash in the first place: those who are now asked to fund infrastructure overhauls as well.

Naturally the same logic could be applied to all other aspects of the aging US infrastructure: perhaps instead of everyone paying for something which benefits abrnomally a select few, it is those who extract the most externalities out of these societal programs should be the ones paying for their upkeep?

Just a thought.


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Fri, 04/20/2012 - 07:44 | 2360597 Waterfallsparkles
Waterfallsparkles's picture

The Big Generators run on Natural Gas or Propane.  With Natural Gas the Gas is still supplied even with an electric shut down.

Fri, 04/20/2012 - 00:27 | 2360338 Maos Dog
Maos Dog's picture

Actually, the fact is that the problem is WORSE than stated in the above article.

You need to overlay demand charts to see the real ugly picture.

YOY total net generation down 6.4%

YOY retail useage down 6.5%

(per  and )

Demand has been dropping for at least two years now, so, the grid is failing at the same time demand is down. 

Fri, 04/20/2012 - 02:32 | 2360420 Yen Cross
Yen Cross's picture

 You have to ask yourself? Why are flows so heavy midmonth into GBP?  It's not fundemental! The BoE citing inflation wouldn't cause these parabolic moves. It's repositioning! It's swap lines being rinsed through London! The aud/usd has barely moved.

  Banks are in need of euros not dollars! The ACB's have been rinsing euros for 2 weeks via the dollar. Europe is in a bad way!



Fri, 04/20/2012 - 07:54 | 2360609 GMadScientist
GMadScientist's picture

They forgot to take their pill?


Fri, 04/20/2012 - 03:07 | 2360445 Yen Cross
Yen Cross's picture

 From  Greece to Germany! A little fun! Make sure you turn the volume way up!

Fri, 04/20/2012 - 04:20 | 2360480 Zero Govt
Zero Govt's picture

Fantastic chart

...the (over)regulation of the power industry is going really well then, the Regulators are regulating the Industry to ever higher quality

Fri, 04/20/2012 - 05:13 | 2360503 falak pema
falak pema's picture

...the (over)regulation of the power industry is going really well then, ...

Since when is the power grid of the USA in the hands of government?

Its totally run by the "Enron" mindset robber clique. Its a private sector baby just like Oil is, even if its controlled from "behind the pseudo-government sector curtain", in some states. The Rockafella dynasties control energy/ power production since inception of industrial USA. Your perception of Private Oligarchy Power play in the name of sacrosanct profit maximisation is that it is statist!

And overregulated....Its at the OTHER end of the political spectrum, and it RUNS the statist, elected, impotent, grovelling Congressional patsy, crony, junkie, monkie, cabalista mice and lice coterie that pretend to be free responsible men. We are in the Roman Coliseum when we are in DC today. 

The day when the private sector Caesars become defenders of public interest is the day we will see true honest governance. But that was supposed to be the role of the People; to elect these public minded people and to control their actions thru the elected class of Congress. That having morphed, we now have the Enron brigade that runs the USA.

Is that Keynesian logic or medieval feudal logic, or worse; Fall of Roman Empire death pangs?

Lets get our historical perspective in place when we bandy words. 

Fri, 04/20/2012 - 07:06 | 2360563 Catullus
Catullus's picture


Since when is the power grid of the USA in the hands of government?


You're in the denial phase.  No serious person can look at the US Power industry and conclude that it's not almost completely regulated by the various governments all over the country.  Even in the states with so-called "deregulation" won't call it deregulation for fear of angering a politician.  They used the euphamism "retail choice" as to not offend their PUC central planners.

Fri, 04/20/2012 - 07:46 | 2360599 falak pema
falak pema's picture

"regulated" to please those who control the king of Cairo... You don't have to be the Governor of Cairo, you have to be he that governs the Governer of Cairo. Learn from the British Raj; this remark is a page out of their book. It was the way the East India Company, the Enron/Seven Sister racket of the Brits, ran their Empire, behind the curtain of a surrogate governor of Cairo.


Fri, 04/20/2012 - 07:23 | 2360578 GMadScientist
GMadScientist's picture

I guess they consider pro-forma oversight of how often they can raise their prices (every time I get a bill, apparently) deeply burdensome.

Interesting that this chart can convince the liberteenyboppers that regulation affects the aging power grid more than the weather.

Rorschach blots...


Fri, 04/20/2012 - 04:13 | 2360487 lolmao500
lolmao500's picture

North Korea is doing something stupid again...

media now abuzz with Kyodo report from a "South Korean gov't source" saying 2nd rocket still at new launch site.

Fri, 04/20/2012 - 07:24 | 2360579 GMadScientist
GMadScientist's picture

Worst Kabuki ever.


Fri, 04/20/2012 - 04:21 | 2360491 BlackVoid
BlackVoid's picture

A clue on how to stop them.

Fri, 04/20/2012 - 04:51 | 2360504 lolmao500
lolmao500's picture

Mr Barak says all options are on the table, including a strike on Iran before the next round of scheduled talks. Although he agrees that an attack could ignite a bigger war with Iran, Mr Barak says it is important to deal with Iran before it goes nuclear.

Fri, 04/20/2012 - 04:56 | 2360509 I should be working
I should be working's picture

Believing the debt of joe six pack has anything to do with it presumes the government is capable of getting anything done.

When the grid crashes those with money will build their own, while the poor live in the dark.

Fri, 04/20/2012 - 04:59 | 2360512 zonetraders
zonetraders's picture


Markets do not go down that easy but they will.

Fri, 04/20/2012 - 05:45 | 2360531 Laretes
Laretes's picture

Before you blame everything on your current president: While staying in the USA (before Obama) I was literally shocked to see the state of the power grid. Most of your power lines are above ground, run through trees and rubbish like that. Here comes a storm, heavy snow or ice and boom the power is gone because some of those poles drop.

Then of course the key to sustainable energy is to reduce consumption. Easily done: Stop building cardboard houses equipped with heating systems that were old 20 years ago, stop running airconditioning everywhere and down to chilling temperatures etc etc. Flame away, but these are facts.

Fri, 04/20/2012 - 06:02 | 2360539 Catullus
Catullus's picture

Those may be facts, but they have nothing to do with it.  Reducing consumption does not increase the reliability of the grid. 

Fri, 04/20/2012 - 05:51 | 2360532 Catullus
Catullus's picture

The cause to 2011 was a hurricane that skidded an area of the country that doesn't normally see hurricanes.  AND early 2011 had a lot of snow in certain areas of the country.  And the flooding in the east in the early part of 2011.  And the Texas snow storm in Feb and the drought throughout the summer coupled with record ERCOT demand in August. 

I'm not sure where the DOE got the estimate for that number on cost.  It's probably a typical government statistic where it's probably one or two events and they put it on the chart.  Cost to credit card companies occurs much more frequently since they're mostly POS transactions. It's probably true or may even be higher for a brokerage, but they all have back-up generation for this reason. 

Interestingly enough, it's very difficult to locate these facilities.  You know they would have to be in Northern NJ, CT, and NY.  They're not huge loads, but they do fall in large C&I rate class across the east.  I'd imagine their load profile is such that it's a very stable load.  Their biggest socialized net cost to the grid is probably distribution more than anything else.  If you were to look at ConEd, PSEG, CLP, and maybe ORU, their biggest socialized cost is their pension payments.  A lot of people see their bill go up every year, but it's not because of the energy, transmission, or capacity costs.  It's utility distribution BECAUSE of the pension costs.  But such is life under monopoly, command and control economies. 

Fri, 04/20/2012 - 06:58 | 2360555 Sandmann
Sandmann's picture

Do you really mean to say they don't have backup generators ? At least in the days of industrial plant corporates used to generate their own electricity with cogeneration or coal. It is only in the days of Service businesses burning energy to run printers and PCs and plasma Tvs that they seem to want to load the system and then display a couple of Chinese solar cells and pretend to be self-sufficient

Fri, 04/20/2012 - 07:11 | 2360565 Ghordius
Ghordius's picture

I also have trouble believing there are no backup generators.

A nephew of mine was moaning years ago for a while about his dancing club in Italy and how regulations forced him to install a backup generator system. A disco, for criminy, is not exactly what I would call a critical industrial or infrastructural facility but there you have it...

Fri, 04/20/2012 - 07:16 | 2360571 Catullus
Catullus's picture

It's a DOE statistic.  They're not doing heavy research.  It's probably one or two expensive incidents.

Fri, 04/20/2012 - 07:16 | 2360569 GMadScientist
GMadScientist's picture

If only there were a known technology that provided local generation to eliminate the need for massive peak spikes from (wait for it...) centralized generation.



Fri, 04/20/2012 - 07:17 | 2360572 Waterfallsparkles
Waterfallsparkles's picture

Where I live the power goes down at least 10 times a year.  Sometimes for 3 to 4 days in a row.  I am also on a Well and when the power goes out you do not have any water for anything, including flushing.

Ironic that Constellation Energy actually gets to charge more for Electricity after a power outage to make up for lost revenue.  That is Outrageous.  They cannot pre trim trees before a storm so the electric goes out.  They take their good old time repairing the lines and then charge you more to make up for when you did not have power.

I think there is a Bill now in Md. Legislature were they would be penalized when the power goes out and will not let them raise rates after a storm.

Recently they came and trimmed some of my trees since the Bill.  And my Son was generous enough to give me a whole house generator.  Now I just need to find about $7,000. to buy a propaine tank, fill it and get it hooked up to the house.

Fri, 04/20/2012 - 07:26 | 2360581 Waterfallsparkles
Waterfallsparkles's picture

Also, Constellation Energy has a program where they can turn your AC off if there is peak demand for electricity in a heat wave.  They pay you $25. per month for 4 months for this privledge. 

Last year with the 100+ heat wave they turned peoples AC off for 3 to 4 days.  The program said that they would cycle your system on and off but no one though they would actually turn you off completely.  No one was happy that signed up for the program as they almost died from the heat. 

Fri, 04/20/2012 - 07:42 | 2360593 Catullus
Catullus's picture

BGE has the program. And theyve had it for years. Some people have received $1000 over 3 years and they got their a/c cycled off 3 days in 3 years. It is a total voluntary program.

Fri, 04/20/2012 - 08:29 | 2360616 Waterfallsparkles
Waterfallsparkles's picture

I know.  That is who I am talking about and yes I signed up for the program.  It was OK, not great for a day or two but after a week it was too much without the AC going on for even an hour.

It turned out that in the begining the cycling on and off broke my AC.  When they would cycle off your fan kept running.  Plus, your condensation pump kept running as well.  So what happened was that the condensation pump burnt up because there was no condensation to pump out.

Although, I am not a helpless old lady.  I had a window AC in the basement from a rental and I drug it upstairs and put it in the window.  I will tell you that a 5,000 BTU window AC will not cool 1000 sq feet but it sure helped take the edge off.

P.S. Do not know where you get the $1,000. figure.  They give you something like $25. per month in the Summer for 4 months.  Over 3 years it would add up to $300.

Fri, 04/20/2012 - 07:22 | 2360577 Nacho Libre III
Nacho Libre III's picture

Our electrical infrastructure just needs to be rebuilt. So borrow the money and do it. Is that so hard? Political win-win since it would feature exponential job creation. Parabolic even.

Fri, 04/20/2012 - 07:35 | 2360587 Waterfallsparkles
Waterfallsparkles's picture

The power Companies are the ones that benifit from the infrastructure.  In Md. they are the providers of utilities, which they charge you for on your Bill.  If Customers are paying them to provide and maintain the infrastructure then they need to take care of updating it.  They do not as it would cut into their profits.

Fri, 04/20/2012 - 07:57 | 2360614 mantrid
mantrid's picture

when trying to explain housing bubble and austrian cycle theory to someone, for the purpose of explanation I used a simplified model where excess houses are built but energy infrastructure is neglected. raising power consumption to heat houses vs deteriorating power supply raises costs so ppl who though they could afford a house found themselves paying higher bills thus they could no longer sustain their mortgages.


it was a model to illustrate core concept of disturbances in the economy caused by inflation, but it seems it is far more real that I even thought...

Fri, 04/20/2012 - 08:12 | 2360622 El Viejo
El Viejo's picture

I installed Malibu landscape lighting years ago. A couple of years ago I replaced the bulbs with 4w LED bulbs to save on power consumption. The bulbs were interesting in that they worked on either 12v AC or DC. When we lost power last year for a couple of days I just went to the garage and grabbed my boat battery and disconnected the Malibu transformer and instead hooked the lights to the battery. I removed some of the bulbs to cut back on consumption and ran three lights for eleven hours. The battery still showed 12v the next day.

I also have another boat battery for my HAM radio so I could keep in touch with local emergencies and ran my small bedroom flat panel TV off another car battery and a 12 to 110v inverter to keep track of the storms moving through the area. These new flat panel tvs draw a lot less current than the old CRT TVs, but to use it for any length of time a small one is best. It is a good thing to have an antenna pre connected to your TV to pick up local channels in times like that. You can put the antenna in the attic. You cannot rely on cable being up and if you have ATT Uverse you will lose your land line phone if the UPS goes down too (in about 2-3 hours).

PS the FCC does nt require Morse Code for a HAM license anymore so if you know anything about electronics it is easy and cheap to get a license that lasts for 10 years.

Fri, 04/20/2012 - 09:13 | 2360766 epwpixieq-1
epwpixieq-1's picture

And now imagine what a closely placed EMP to a well known exchange/data facility and its co-disaster location will create.

Beauty in the works. As someone will note, nothing new under the sun. Just google solar storm August 28, 1859.

One thing that our electrically based technology does not deal well with is increment of the HV gradient. In such storms, the HV gradient ( that constantly exist in the air, about 100V per 1 meter ) gets to be so powerful that you can power many incandescent light bulbs just by "plugging" them, with one end, to a simple antenna and the other one to the ground.

Fri, 04/20/2012 - 10:48 | 2361144 El Viejo
El Viejo's picture

Remember when the astronauts dangled a long wire vertically from the space station? It generated so much power travelling through the earth's magnetic field at 18000 mile per hour that it blew the wire in two.  

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