A lot of things these days are meant to scare us: COVID infections going up and down, the government implementing measures against it, rising inflation, the government implementing more measures against that and... the winter. Yep, the winter is coming (not surprisingly after autumn) and the whole EU is preparing for a brutal rise in natural gas price.
This is not quite a novelty, but it's interesting how different countries are tackling this issue. From this source:
On Tuesday, researchers with The Hague Centre for Strategic Studies said that there is little the government can do at the moment apart from exercise damage control.
In the meantime, France has frozen gas prices and Spain has slashed value added tax on energy bills. In the Netherlands, the caretaker government has set aside €500m to offset the price increases but, the FD said, this will only amount to small cut in energy bills which could be hundreds of euros a year more expensive.
So, short analysis:
- Netherlands - the government is stashing some money to subsidize (I assume) partially the cost. This will be too little to make a difference for a lot of people, and more important, the money is coming from the same tax payers that are subsidized. As usual, the gov is taking with one hand (or more) and giving with the other. Nothing to be seen here...
- France - frozen price (pun intended!). As any socialist economy that did that before, the immediate consequence is that the respective product/service is getting erased from the regular market, getting more output on the black market. In the natural gas market however, selling gas with a price less that it costs leads the energy companies into bankruptcy. Something that is happening in Belgium and UK currently.
- Spain - they actually did something that makes sense: cutting down the taxes, to keep the price under control. Of course that will mean to cut expenses as well, but probably that wouldn't happen. Most likely they will borrow to cover the difference, borrowed money coming freshly printed by the European Central Bank. Which means in medium and long term more inflation. Which means even higher prices.
A lot of things can be blamed (Russians playing hard, Chinese giving orders to companies to be stocked for the winter, etc) but truth to be told, the insane money printing coming from all the national banks (with FED in U.S. and ECB in E.U. leading) is not without consequences.
