Sempra LNG Project could lock in prices

Allowing a regulated utility with a questionable history of alleged price-fixing to control the market for Liquefied Natural Gas in California might not be a good idea, according to pundit Tom Elias:

In short, Sempra claims it might let its $1 billion plant and pipelines -- plus the expensive ships of BP and Shell -- sit idle if prices drop significantly. Just such a price collapse occurred when the previous LNG effort was abandoned in 1981.

"I don't believe for a moment that they would idle an LNG plant under any circumstance," says Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights. "We've learned too much through the energy crises to believe companies like this one will take the hit if their big gamble goes bad. We also risk locking ourselves into a new dependency on foreign fuel."

Heller referred to the record of energy companies during the electricity crunch early this decade, when the El Paso Co., owner and operator of the largest pipeline bringing gas to California, ran it far below capacity in order to drive prices up. At the same time, electricity generators were also manipulating the market, using methods that later resulted in several criminal convictions.

The solution, then, seems obvious. Find someone else to build an LNG plant.