NEWS AND COMMENTARY
March 5, 2001
California's Long, Hot Summer Will Be America's Problem
California's energy crisis isn't over yet. Just when you thought that the state's energy problems were solved, news appears that those pesky blackouts could get even worse in the summer months. Even worse, it could dim the lights on the economy of the entire nation!
After a month of negotiations, the Governor has only managed to scrape together 2% of the energy supplies the state will need to function in the summer months. Add to this the fact that hydroelectric power supplies are at dangerously low levels, and it's going to be a long, hot, dark summer for Californians.
What's more, California's energy crisis puts the entire nation's economy is at risk. California has the seventh largest economy in the world. An energy shortage that cripples California will reverberate all across America, hobbling companies from high-tech start-ups in Silicon Valley to blue-chip banks on Wall Street.
The bad debts that power companies have run up could lead to a huge hit for lending banks and bond holders. In fact, Fitch just downgraded Pacific Gas & Electric calling bankruptcy "a near-term possibility."
Bottom line: California's continuing energy crisis could very well hamper the recovery of the U.S. economy and send it deeper into recession.
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