Deregulation – it’s your power to choose
Governments are mandating electricity deregulation in countries all across the world. You may remember when telecommunications, banks, or the airline industry deregulated. If you do not know what deregulation means, then continue reading. It’s not as difficult to understand as you may think. Deregulation means a shift in ownership. Think of a pie. Before deregulation, only one company owns the entire pie so they can do whatever they want with it. They can raise or lower the price of the pie, because they know that people are still going to buy it and they are the only ones who can sell it. After deregulation, many companies have a little piece of the pie and everyone gets to enjoy it. The price of pie goes down and hovers at an equilibrium price since many companies are in competition, wanting everyone to buy their pie at the “best price.”
This is how deregulation works. When the electricity industry deregulated, this opened up the opportunity for many companies to go in and offer their service. This creates a much better situation for customers because competition forces companies to become more efficient, offer better service, and reduce pricing for customers. This has the long term effect of lower pricing for customers and fuels economic growth.
You may be wondering why the government would choose to get involved in such a massive undertaking. Why do governments choose to deregulate their markets in the first place? The reality is, as populations increase and new homes, building, shopping centers, and industrial facilities are established, the demand for electricity is continuing to rise. At the same time, the infrastructure that produces electricity and natural gas and delivers it to people’s homes, commonly called “the grid,” continues to age and require more and more maintenance. This infrastructure can only create and deliver a certain amount of electricity. To meet increasing energy demand, federal and state governments need… you guessed it, money! And lots of it!
Regulated markets, which are dominated by monopolies, are not an attractive place for people to invest their money. Without competition, spending billions of dollars in new infrastructure and power generation facilities is very risky because you only have one potential buyer…the monopoly itself! Let’s go back to the example of the pie. Let’s pretend that it costs one billion dollars to create a facility that bakes pies. Would you want to take the billion dollar risk of establishing this facility if there was only one company available to buy your pies? The answer is definitely no! The only scenario that is would make sense to invest that kind of financial capital is if there were a lot of companies who would buy your pies and those companies’ clientele had a high demand for your pies. In this scenario, you would be likely to recoup your investment and become profitable in the new facility that you established.
So the government has two choices when it comes to energy. They can either increase taxes and fees on their current population (which politicians hate doing just as much as we hate paying), or they can deregulate the market and create an attractive scenario for private investment dollars to flood in and solve the problem for them. More and more states and countries across the globe are choosing option two for obvious reasons, and customers and companies are benefiting mightily as a result.
Financial gurus like Warren Buffett, who is considered by some to be one of the most successful investors in the world, says that the deregulation of energy will be the greatest transfer of wealth in the history of the United States and the globe.
Hundreds of billions of dollars will move from monopolies to entrepreneurial companies and individuals like you and me. This will only happen one time and it’s happening right now!
We feel very blessed to be a part of this opportunity and hope you choose to get some of this pie while it’s still hot!
You don’t have to take our word for it…
In case you still are not convinced about the magnitude of this deregulation thing, here’s what the wealthiest man in the world and national news have to say about it!