The EU “ceiling” for the price of gas? An economic nonsense that will take away our reserves
Yesterday's EU summit generated two little useful, if not harmful, things:
- the half ban on imports of the oil Russian, which in any case saves Hungary and… .. Germany;
- the strange, absurd idea of the “ceiling” on the purchase prices of European gas.
We will talk about the first point separately, now let's see the second idea, that of the “Roof” on purchase prices, or Cap, for Russian gas.
The Idea is Italian and this shows how much the financialization of economic thought in Italy has advanced at the government level, putting aside both the basic economy and common sense. Giavazzi did his job, destroying what little economic knowledge still survived. The basic idea is that the whole world works like the world of finance, so if I offer a financial product, but there are no buyers, the value of this financial product will drop. Too bad that I can live very well without a bond or without an ETF, while I don't live very well if I don't have the gas to warm up, for energy and for the industry. If the financial market is dominated by buyers, by lenders, who have the scarce good "Money", that of real goods is driven by the supply of the scarce good, be it oil, gas, minerals etc.
The Russian gas price cap envisages that if a certain gas price level is exceeded, purchases will cease and reserves are used. Well, good, encore! And if the reserves are dangerously low, what happens? Where do you get the gas from ? Not only that: not all countries have the same storage capacity:
We are the second country in terms of court. Germany, with its own, must already think about its own economic system, as well as about countries like Poland with scarce reserves and already out of Russian gas. Austria is already cut off from Russian supplies by the exclusion of Gazprom's European branches, so its deposits are practically zero. Who will have to sell their gas to others at a controlled price? Italy …
Prof Rinaldi also noted this yesterday on TV in Tonight Italy
Agreement on sanctions: stop on Russian oil and gas price cap.
@Rinaldi_euro intervenes at #StaseraItalia : "It will turn out that we will have to give the gas to the others" pic.twitter.com/23pG05tJlv
– Tonight Italy (@StaseraItalia) May 31, 2022
In short, as usual, the government smbra act "Not for the good of Italy, but for the good of Europe", in this case directly to the detriment of Italy and with a minimum advantage for Europe. The solutions for the gas problem are very different, but who explains it to Giavazzi? for him there are only finance and "markets". When he has frozen water in his water heater, maybe he will begin to understand something….
The only positive thing is that the measure is only currently "under study". Let's hope someone studies well …
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article The EU “ceiling” for the price of gas? An economic nonsense that will take away our reserves comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-tetto-ue-per-il-prezzo-del-gas-unassurdita-economica-che-ci-portera-via-le-nostre-riserve/ on Wed, 01 Jun 2022 08:00:45 +0000.