Hose Water is it, Anyway?

Written By Brian Hicks

Posted April 17, 2006

Editor’s Note: Sam Hopkins just returned from the land of haggis and deep-fried Mars bars. He was there on a mission from god to find out what Europe is up to regarding renewable energy. However, like the law of unintended consequences, Sam also discovered other developments outside the world of traditional renewable energy. He discovered that Europe is big on water.

So are we.

This morning watching CNBC it was mentioned that some Wall Street institutions are requesting the creation of a water ETF. This is validation of one of our main theses that water is going to be a major subject for years to come.

Like always, we’ve been way ahead of the market.

And with guys like Sam in the field literally on the front lines of these issues, we’ll remain ahead of the curve.

England isn’t generally thought of for its dearth of H2O. But as I watched a spokesman for Thames Water interviewed on the anomalous beach of a Sussex reservoir, I knew the land must be thirsty.

The world knows water well. The world knows wells because of water. Only later on did some intrepid individuals decide to use the ancient method of physical sustenance called dowsing to draw another liquid – oil – from the ground.

The distribution of water, just like that of oil, is not equitable around the world or even within landmasses as small as Great Britain. As I continued to take in my morning show, a caller from the northern city of Birmingham phoned in with a generous offer:

"If the South feels it hasn’t got enough water, I for one would gladly contribute some of our abundant supply."

The River Danube in southern Europe has meanwhile reached its highest level in 100 years, sending residents of Balkan countries running for high ground. But London is in direr, drier straits.

Last year was the third-lowest rainfall on record, according to Thames Water, which supplies sewage to 13 million and drinking water to 8 million people in the London area.

So the utility’s reaction has been to impose a hosepipe (garden hose to Americans) ban. Put in effect April 3, the hosepipe ban prohibits the use of household water supply to wash cars or water gardens.

Cockney cultivators consider Thames Water to be a "destroyer of lawns," but their failure to acquiesce can bring a fine of 1,000 pounds under 1991’s UK Water Act.

This brings up a striking point in today’s world of resource scarcity. Back here in Baltimore, citizens and politicians are playing the outrage card over a Maryland state plan to restore market-based pricing after years of stagnant electricity rates that were supposed to encourage competition.

A Mutant of a Market

Utility competition is not like the competition we are used to. If Larry has a hot dog stand and Bob wants to open one down the street, Bob can get the permits and go into business with worries limited primarily to what kind of mustard to use and how best to draw customers away from Larry (I recommend balloons).

But if Larry wants to start a power company to rival Baltimore Gas & Electric, the undertaking is quite a bit more involved and cost-intensive, entailing access to public infrastructure, tax questions, and a hefty component of nudges and winks at the political echelon.

Utilities are quasi-governmental enterprises: by delivering a public service to a majority percentage of the populace, they interact with the masses in a more immediate a way than most elected officials. But we can’t vote for our electric supply, and in most places we can’t even compare prices to get a good deal as we would for, say, a hot dog.

The only thing we can do to lessen the blow is alter consumption, which most Americans and, evidently, most Britons are loath to do.

I recently heard a BG&E executive talking on local radio about the pending rate hike and how Baltimore consumers should deal with the price pinch. "Try wearing a sweater around the house," he said.

My fist clenched, I pounded the dashboard at his audacity for suggesting that I suck it up and wear layers indoors while he and his colleagues prepare for a cartoon-style money bath. But he has a point. We can do things to lessen the financial impact of scarcity that we know leads to higher prices, especially where fossil fuel is concerned.

With prices approaching $3 a gallon here in the US, which Jay Leno cleverly called "President Bush’s exercise plan for America," we are thinking a bit more carefully about if we really need to drive to the grocery store down the street. Leaving the air conditioner off in favor of an efficient window fan wouldn’t be a bad idea come summertime.

This brings us back to water.

Utility Futility

Water is not commoditized in the same way as oil and gas, and its price per unit is thus obscure. Commodities, traded on the open market, carry certain prices and can be bought and sold, but water as a public good is both more open to fair distribution and more susceptible to undersupply when that assumed right is threatened by Mother Nature.

Wise use is a virtue, and one that will leave everyone better off both in times of bounty and in times of paucity.

So it shouldn’t surprise you that Thames Water’s "hosepipe cheats hotline" rang of the hook last week when concerned citizens spotted a gratuitous use of public water supplies for cosmetic window-washing. These dastardly perpetrators of liquid larceny were private contractors. The building they were power-washing at 2400 liters per hour was none other than Thames Water’s Reading office.


– Sam Hopkins

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