alf a century ago, the economist Joseph H Schumpeter described how capitalism/ entrepreneurialism "incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one," a process he called "creative destruction." Public policy, technology, and market structure changes are causing the creative destruction of the gas industry at retail in any sense that is relevant to consumeTs. Indeed, even the "converging" of gas and electric industries toward an energy or BTU industry, if pursued to its logical conclusion, will be a victim of creative destruction. Rather, we are evolving toward two new, as yet nonexistent, industries: a "flowing content" industry and a "conduit" industry, each with its own separate and distinct central organizing principle, marketing strategy, and core competencies. This article briefly traces the policy, technology, and market structure drivers resulting in such a transformation and the central organizing principles of these soon-to-be-created industries.
Three Sets of Drivers
Three distinct drivers-imposed public policy, technology, and adaptive market structure-will be catalysts to a massive restructuring of one of the largest industries in the U.S. economy.
Ken Malloy Is a consultant with the Corporate Strategy and Management
Group of Hagler Bailly, Inc., Arllngton, Vlrglnla, spclalking in retail unbundling and wmpetltion strategy. He was the lead career official on gas Industry mstmcturing and wmpetitlon pollcy at the U.S. Depsrtmenr of Energy for the last t h w admlnlstrations.
Ken Malloy
Six Imposed Public Policy Drivers
Public policy is the key force driving change in the energy industry. The last decade has seen the coalescing of a consensus that markets, not government, should be the main driver of energy production, consumption, and, to a more limited extent, transpor-