Electrorheological fluids are colloidal suspensions that solidify under the influence of electric fields, due to the fact that electric fields induce interactions between particles arising from either the dielectric or the conductivity response of the particles. These interactions are principally dipolar at long distances. However, because of the image forces induced by constant potential electrodes, the long range dipolar repulsion is suppressed. It follows that the ground state of the system consists of a macroscopic phase separation into regions of high and low particle concentrations. The mechanism by which the suspension approaches this phase separation may be strongly dependent on thermal fluctuations. In hydrodynamical flows, these suspensions behave as shear-thinning ''Bingham plastics''.