The Monopolists in My Back Yard

When Con Ed dug up West 72nd Street last year to lay new natural gas lines, I thought great, now the apartment buildings on my block can switch their boilers to gas and stop letting off those black farts that sprinkle soot on my windowsill. But then I read David Cay Johnston’s new book, The Fine Print: How Big Companies Use “Plain English” to Rob You Blind. Robbery is the least of it. Utility monopolies—a major focus of the book—increasingly cut corners on safety.

One such corner cut is coming to a neighborhood near me: it is a 30-inch high-pressure gas line passing under the Hudson into the West Village and heading north under Tenth Avenue before branching out. As detailed in Johnston’s book and a recent article, high-pressure gas, gasoline, or jet fuel line explosions kill or injure someone every week. In December 2010, a 30-inch gas line blew up a block in the San Francisco suburb of San Bruno, excavating a 4-story-deep trench, leveling 35 houses, killing 8 people and injuring 60 more. It took Pacific Gas and Electric over 90 minutes to shut off gas to the flames. That was a low-density single-family neighborhood.

Given this history, one would think New York City officials would at least require detailed safety studies before allowing the new 30-inch line. Nope! No special safety requirements for high density, no environmental impact, no inspection requirements. As recently reported in the Village Voice, federal regulations for the Hudson crossing are a joke, and once the gas gets into Manhattan, it’s all up to our friendly local gas, steam, and electric monopolist, Con Ed. Remember that horrendous 2007 steam explosion at 41st and Lexington? But steam isn’t flammable. Now imagine a San Bruno-style eruption in Manhattan: high rise buildings ablaze, cars melting and gas tanks exploding in the radiant heat, power and water blown out, fire trucks unable to get close, and screams of trapped victims drowned in the roar of the towering blowtorch! Hurricane Sandy meet 9/11!

David Cay Johnston is a former New York Times investigative reporter on taxation and regulation, Pulitzer Prize winner, and now a Reuters columnist. The Fine Print is a sequel to his two earlier catalogs of corporate crime, Perfectly Legal (2003) and Free Lunch (2008).

Monopoly is the underlying theme of The Fine Print. We all know, sort of, what monopolists do all day. They charge their customers “what the traffic will bear”, that is, they raise prices until they lose in volume what they gain in prices. At the other end, if they can, they squeeze their suppliers and their workers. As part of the squeeze on both ends, they provide poor service and poor maintenance of facilities. “Natural monopolies” share a key characteristic: high fixed costs that make competition difficult or impossible. That’s the reason the public either owns or regulates “utilities” like water, power, gas, highways, railroads, sewers, waste disposal, subways and buses, cable, air routes and many others.

Johnston documents in detail the misbehavior of utilities and the laxity of their regulators. He includes another monopolist in my back yard, Time Warner Cable. Time Warner and its dancing partner, Comcast, have between them carved up most of the US. Time Warner—grrr! I just had to reboot the cable box for the fourth time this week. Internet crawls compared to Europe. Then there’s that PBS NewsHour sponsor, Warren Buffett’s railroad, BNSF, “the engine that connects us.” It connects to some hapless spur lines at gunpoint—your money or your business! Warren Buffet in fact pops up several times in the book. He owns quite a stable of monopolies; his public-spiritedness clearly doesn’t include reining them in!

If you want to get really mad, read this book. Meanwhile, I’ve learned there are already two slightly smaller high-pressure gas lines in Manhattan, including a 26-inch baby that runs along 75th street three blocks north of me, and then angles across Central Park south of the boating lake to 71st Street on the East Side. I had noticed the little yellow warning posts on my daily walks; now I know what lies beneath!

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