Is Energy Just A Commodity? Let's Ask The Systems Of Exchange Typology
Updated: Jan 11, 2021
How are electricity prices shifting with changes in demand and supply? Energy economists are very good at seeing electricity and other forms of energy as commodities whose prices shift in response to market changes and composition.
Energy - the fuels that drive our lights, cars, air conditioners, and computers - would seem to be pretty much a topic for engineers and physicists. But social science has a contribution to make too.
Let's start by considering electricity, that flow of electrons that powers so much in our homes and workplaces. Economists have done a good job of looking at energy markets. How are electricity prices shifting with changes in demand and supply? Energy economists are very good at seeing electricity and other forms of energy as commodities whose prices shift in response to market changes and composition.
An example of markets that use a Price logic is wholesale electricity markets such as the California Independent System Operator, one of seven North American ISOs that sits above the interests of buyers and sellers. The CAISO balances supply and demand and keeps the market functioning to avoid supply interruption. It uses a range of financial tools as well as examining current supply and demand on the grid in real-time. The Price logic is reflected in their calculus and very existence.
There is a also different way of getting electricity that includes the Associative logic - the Community Choice Aggregation model. In places that allow CCA, neighbors collectively invest in solar generation and own shares of the installation. People who cannot have solar panels on their roofs, for example because they are renters, can get solar-generated electricity and benefit from any savings as well as supporting environmental concerns. CCA combines Price with an Associative logic. Together people in CCA regions have more choice than if they purchase electricity as individuals.
In the U.S., 14% of Native American households have no access to electricity - a rate 10 times higher than the U.S. population at large according to the Energy Information Agency. Tribal governance organizations are working to bring electricity to often far-flung tribal members who have no access to an electricity grid. The Navaho Tribal Utility Authority as well as independent tribes including the Hopi Nation in Arizona and the Tuntuntuliak Community Services Association in Alaska have worked to bring finance and technical assistance to tribal members. This is an example of both Communal and Associative logics working to use social ties and commitments to provide energy.
There is even a Moral component of energy distribution. In many places in the U.S. "lifeline" energy assistance programs exist to make sure that low-income people have access to enough energy for basic needs. For example, in New Jersey, eligible seniors and disabled citizens have access to a $225 benefit in 2016.
Electricity is the flow of electrons for sure, but it's also the flow of social relationships that are reflected in various institutions that shape the meaning of and access to energy.