Germany: gas cut will mean bankruptcies, inflation and cold. In the meantime, in Italy it is not extracted

Gas shortages and high prices will cause "shock waves across the country," leading landlords to cut off heating to tenants and numerous business failures, warned Klaus Müller, head of the Federal Networks Agency, the regulatory office for the electricity, gas, telecommunications, postal and rail services markets.

In an interview with the German newspaper Rheinische Post , Müller paints a bleak picture of the crisis, stating that it "will send shockwaves across the country". Banks will increase their activity with installment loans and companies in difficulty will fall into insolvency ”.

Müller's office, which is a federal agency within the Federal Ministry for Economic Affairs and Climate Action, has a bird's eye view of the economic situation in Germany and also a special view of how economic conditions will develop in the future.

Müller expects gas prices to continue to rise, resulting in higher inflation that goes far beyond energy. Müller also warns that there will be a dramatic shortage of gas in the winter, which could lead to owners turning down their heating to save energy. In turn, the Germans may have to contend with colder apartments.

As evidence that the German government is working on the hypothesis of a potential winter crisis, there is already talk of a potential reduction in heating requirements for owners.

“ The Lease Act stipulates that the landlord must adjust the heating system during the heating period so that the minimum temperature is between 20 and 22 degrees Celsius. The government could temporarily reduce the heating requirements for landlords. We are discussing it with politicians , ”said Müller.

The government has already pushed businesses and citizens to reduce energy consumption, but in the future this pressure could come in the form of new laws and regulations, and Müller has called for more pressure to be exerted to save gas. Although Germany has pushed for a blanket ban on Russian oil imports, the country is heavily dependent on natural gas from Russia. If Russia were to cut gas in the critical months of winter or even limit supplies, it could cause critical damage to the German economy, a scenario energy experts have already warned about.

Germans will not only get colder in their apartments, but companies will also face mass bankruptcies, Müller said. However, he said government policies could help mitigate financial losses and preserve critical gas supplies. He said he wanted to encourage companies to save gas with a bonus system.

“We want to establish mechanisms to reward companies that voluntarily give up gas quotas with a premium. It is always better that the adjustments take place through prices rather than through the direct intervention of the state ”.

Müller is also pessimistic about price developments in Germany and expects the situation to worsen.

“ Gas prices for private homes have already multiplied compared to the pre-war period. Tenants can have nasty surprises if they have to pay high arrears , ”he said, referring to the fact that many Germans receive surprise bills at the end of a billing cycle if energy prices rise.

In Italy, however, the problem is the quarrel between Di Maio and Conte. do not think that we can do better, indeed our dependence on gas for energy is even worse than that of Germany. Our deposits are only 54% full and Russia will do everything to keep them from filling up. Yet we have unused internal resources. What are Cingolani and the government waiting for to cancel all constraints?

---

---

The article Germany: the gas cut will mean bankruptcies, inflation and cold. In Italy, meanwhile, it is not extracted, it comes from ScenariEconomici.it .

---

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-il-taglio-del-gas-significhera-fallimenti-inflazione-e-freddo-in-italia-intanto-non-si-estrae/ on Fri, 17 Jun 2022 11:54:00 +0000.