When taken to extreme, the pieces could also rise.
Imagine that meat demand drops gradually over a few decades, and meat production adapts to it. As a result, the whole industry begins to lose the economies of scale. After a century of this kind of development, meat is produced by a handful of small farms, where the operational costs per mass unit of meat produced are very high. If that ever happens, meat would become a special ingredient most people don’t want. Those few who still do want it, are willing to pay absurd prices for it.
litchralee@sh.itjust.works 4 days ago
This is generally correct, but with a somewhat-rare caveat. If the product was priced as the sum of variable costs (eg unit cost of fuel to yield 1 kWh of electricity) and of fixed costs (eg price to build a power generating station that will last for 20 years), then a reduction in consumption can actually cause an increase in per-unit costs for the remaining consumers.
This is precisely what is playing out in California with the incumbent electricity provider, PG&E. For arcane reasons, their regulated monopoly allows them to undertake large-scale construction projects, with a guaranteed rate of return (aka fixed cost) passed onto consumers. But since solar installations have smashed even the most optimistic expectations, demand for fossil fuels generation is slowing. But because a power plant running at 50% output still needs to pay off 100% of its loan payments, PG&E is using the situation to try to hike consumer rates even more. You know, to pay for those large projects that PG&E owns…
At the end of the day, non-solar consumers are being asked to shoulder more of the burden despite falling electricity demand (pre AI), but it’s not caused by solar early-adopters, but due to PG&E’s own greed and desire for guaranteed profit.
TL;DR: prices will usually go down when consumption goes down, unless a monopoly is trying to save their own skin. PG&E should be dissolved.
classic@fedia.io 4 days ago
Man are PGE not the good guys…