Dan Brouillette, who served as US energy secretary under Donald Trump, describes some of the measures EU member states are taking to push energy prices down as a Ponzi scheme. “They don’t offer a long-term solution,” it sounds.
The European Union is being hit exceptionally hard by what is happening in Eastern Europe. The sanctions imposed by Russia and the West are driving European energy prices up sharply. Yesterday, for example, the gas price had skyrocketed by about 30 percent after the Russian state-owned company Gazprom announced earlier that it would suspend the Nord Stream 1 gas pipeline for a while.
European governments have already taken various measures to protect the purchasing power of citizens. Germany, for example, announced a third aid package last weekend.
A ponzi fraud
Bouillette is not convinced that all these measures are equally successful. He specifically refers to countries that give their populations money to pay the energy bill. For example, Germany gives a one-off energy allowance of 300 euros and 200 euros respectively to retired and university students.
“Such measures alleviate the immediate pain of not being able to pay the electricity bill, but the money keeps going in a circle. It just goes from the consumer to the electricity company. It is not a long-term solution,” he said in an interview with the American news site CNBC. “You could call it a Ponzi scheme.”
The former US Secretary of Energy also expects energy prices to rise in the short term. The world’s oil markets are very tight and as winter approaches, more oil will be used for heating and other purposes.
In addition, the oil cartel OPEC and a dozen oil-producing countries, also known as OPEC+, announced on Monday that they are scaling back production.
“Need more production”
“The answer to tackling scarcity is to produce more,” says Brouillette. “We are still roughly one and a half million barrels a day short of what we produced two and a half, three years ago. I think it’s very important that we go back to that number.”
Brouillette adds that it was a strange request from the Biden administration to encourage US oil producers to halt exports and prioritize US consumers.
“At the moment, the spot price is higher than the future price. This means that producers have more incentives to bring their product to the market,” said the former energy minister.