Over the last few weeks, some astonishing and chilling changes have been implemented by the current President’s administration. We’re not talking travel bans or increasingly gruesome (though noteworthy) deportation squads. We are talking about all the steps that the President has taken to step back from all the steps that previous administrations made to protect the environment and protect the planet.
Most of these changes come in the form of walking back regulation. This is not surprising, given the hatred of many in the Cabinet and even in the Oval Office for any kind of business restraint. The truth, however, is that not all rules are bad. Some good!
What no one in the administrative branch today seems to understand is that there is a big difference between governing an industry and governing a company.
Setting Up Example
Let’s use an easy example: the energy market. In the United States, some states have a highly regulated energy industry while others have deregulated their markets. In states where energy markets are regulated, provider choices are slim. Often there is only one provider for an entire city or county.
Consumers must purchase their energy through the company if they are to have any power at all. In a deregulated market, consumers can shop around to compare rates and offers. In Little Elm, Texas, for example, residents can compare Little Elm’s electricity rates based on the type of energy offered (fossil fuels v sustainable), energy origin (Texas, other states, Canada, Mexico) and cost.
Pro Deregulation
People in a deregulated market appreciate the choice given to them, especially in terms of price. State legislatures favor deregulation because it helps boost their local economies. States can tax state (or state) providers, which generates revenue while lowering prices for consumers.
Deregulation also provided a platform where energy companies could work together to lobby for improvements across the industry instead of letting one company dictate terms for everyone.
Counter Deregulation
The greatest drawback to deregulating the energy market is felt primarily by the companies that provide the power. It is difficult for one company to establish itself as an “go-to” provider. This makes it difficult for them to encourage state governments to make decisions based on the preferences of those companies. And lawmakers, if we’re being honest, aren’t too fond of how much power the energy market has at the state level.
Industry Vs. Market Vs. Company
Regulations have different functions depending on the level at which they are implemented.
Industry regulations are implemented nationally and have federal implications. These regulations are usually related to the products offered. For example, at the industrial level, consumer energy cannot be 100% fossil fuel-based. A small portion of the supply must come from sustainable/environmentally friendly sources such as solar, geothermal, etc.
Market-level regulation deals with the economy–the supply of products. For example, energy markets are not allowed to base tariff costs on the “flow” or “supply” of electricity. This is in the best interest of consumers as it prevents states from reducing grid capacity as a method of increasing prices.
Company-level regulations pertain to conduct. The best example of this is a a regulation recently repealed by the President. Existing regulations force companies to comply with very strict waste disposal rules or face fines and other penalties. This is to keep the company from polluting the environment. By repealing the regulations, coal companies and other industries can now dispose of their waste materials wherever it is most convenient for them, even if that means dumping them in local rivers and streams.
Regulation is often swept up in arguments against overreaching government. However, keep in mind that there are regulations to protect us. They exist to prevent extortion, pollution and keep consumers safe. The CEO might complain about the inconvenience but imagine what would happen if things were allowed to rage. Can you pay those electricity bills if the price isn’t set? Of course not. No one can!
