Jul 16, 2011

Depressing Local Protests

There have been a series of local protests--signs outraged at this, that and the other.  I haven't paid much attention to them; I spent last month getting married, I'm leaving in a month, and frankly there are things about Bulgaria that are infinitely more outrageous than the sort of misguided populist punching-bags that they address.  However, a couple of things stand out:

There are, for example, signs protesting gas prices that people stick on their cars.  Signs. Protesting gas prices. On their cars.  As if to drive home the irony, people staged a massive protest wherein they stuck a whole bunch of these on their cars and then drove very slowly down a major street, thus forcing everyone with the misfortune to be caught behind them to buy more gas

This is the quality of the local grassroots--buying and consuming more of a commodity (and forcing others to do likewise) to protest how expensive it is.  The proper place for a message about gases prices is on a T-shirt that you wear on public trans or on your bike.  Putting it in your car just gives the lie to the whole thing--I'll whine about it, they seem to be saying, but I'll keep right on doing it.  As long as that is true, gas prices stay where they are.

In similar spirit, we have signs like the one at right.  In short, it complains that the power company purchases electricity at 7.2 stotinki (1/100th of a lev) per kilowatt/hour and sells it to consumers at 17.32 stotinki.  "How long will we be silent?!" demands the bold white text.

But consider: whoever sells the power to the local power company is doing so at a bulk rate; the local power company then has to maintain a distribution network to sell micro amounts of power to several million customers rather than lots and lots of power to just one.  For the wholesaler, the costs look like this:

(Power plant maintenance + fuel + a little billing for a few bulk customers + a few cables + a few salaries) / total kilowatt/hours = cost/power

But for the retailer, costs look like this:

(billing for millions of customers + emergency service + maintenance on hundreds of thousands of power lines + lots and lots of salaries) / total kilowatt/hours + cost of wholesale power = cost/power

For everyone to have electricity, you have to generate the power, distribute the power, maintain the network, and take care of various miscellaneous expenses.  As it turns out, distribution and network maintenance cost more than the actual generating.  By analogy: for a restaurant, salaries, utilities, rent, taxes, etc might well comprise a greater share of the operating costs than the actual food.  Or again for a store: salaries, utilities, transportation of goods, rent, taxes, etc might well comprise a greater share of operating costs than the actual manufacturing of the goods being sold.  This is the same principle.

I can get in a lather about all manner of things, but the fact that wholesale is cheaper than retail isn't one of them.

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