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Markets Good for Security of Supply

Posted in Europe,Price Spikes,Regulation by Cheryl Morgan on the September 19th, 2008

EU Energy Policy has a long post summarizing the results of the CESSA research program looking into security of supply. Most of it can be boiled down to “markets are good, and bigger markets are better than small ones.” How that will go down in the wake of the financial market meltdown is unclear. In particular the report warns governments against removing price signals by capping prices so as to avoid upsetting consumers by exposing them to short term price spikes. There are, of course, other ways to protect consumers from price spikes, but that would involve *gasp* derivatives!

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