Dec

22

If you have a young friend or family member wanting to study markets, they might look at the power markets. They are so large, they are fascinating and no single person can master them.

Consider this:

The market's primary commodity moves at the speed of light. Unlike grains, it cannot be stored. Unlike natural gas, it must be consumed within femtoseconds of being produced (that is a split second).

On the production end, the commodity's financial attributes are entirely dependent on other commodities, most of which are uncorrelated.

On the delivery end, the commodity's financial attributes become dependent on another commodity, which is also uncorrelated. That commodity is wires, which is also auctioned at market.

Once the market is mastered (good luck with that), the student learns it is only one of ten markets operating in North America. Then the question becomes, how does the commodity move between and among markets? The issues of market seams and pancaking suddenly become relevant.

Opportunities are growing:

Power markets are at the beginning stages of development. Not only are power markets growing in North America, they are growing in Europe and Asia. China has power markets. Southeast Asia is starting a new market.

Minds are open. Opportunities abound. Careers are just starting. There are many ideas and concepts to be considered. The issues range from public policy to information technology. There has to be over 100 dissertations waiting to be written.

One interesting person for potential graduate students to consider is William Hogan. His name frequently pops up in FERC, DOE and market meetings. There are others.

The concern:

There are people with good intentions who could ruin the markets. Many want to bypass the markets by claiming the need be the exception. Their arguments range from national security, to reliability, to preserving jobs, to stranded assets to who knows what. Unfortunately, some of those arguments could have traction with policymakers.

Before anyone goes there, this is a bipartisan concern. Most in the industry love free markets - for you. They just want to preserve their cost-plus assets.

The list:

This is just a thought. While I am not personally qualified, perhaps the chair and list members might consider offering their insights. This is a good time. Policymakers are looking for thoughtful people to help them develop and expand markets.

Even if there is not personal interest, if you hear of young economists looking for careers, they might be interested in power markets. They don't need engineering. They need to understand money and markets.


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