Massive energy crisis – Felbermayr: “Creating back pressure on the Kremlin”

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While a debate over a possible electricity price cap has erupted in Austria, economic researcher Gabriel Felbermayr is surprised on Sunday that people have not made further progress with the considerations of easing the burden. What is especially needed is a joint European initiative, said the head of the Austrian Institute for Economic Research (WIFO). However, Felbermayr does not see that Europe is more affected by the sanctions than Russia.

In an interview with ORF “ZiB 2”, Felbermayr sees the huge price increases for energy as a “huge burden” for Austrians. “I’m surprised we haven’t made much progress there,” he says, resigned to the hesitant reaction to the price explosions. But there are “a few ideas” to counter this.

WIFO boss: “purchasing cartel” needed
Above all, the economic researcher believes that a concerted effort by the EU countries is needed. For example, through joint energy purchasing by the Member States – with such a “purchasing cartel” one could push prices not only against Russia, but also against other supplying countries such as Qatar. “We have to create a counter-pressure against the Kremlin,” he continues.

Another idea would be to subsidize the gas price where it is relevant to the electricity market – thereby weakening the current pricing model of the so-called merit order. “If we can get the prices down there, the price for types of electricity that are not produced with gas will also go down.”

“Free power” can save energy
However, as an alternative proposal, Felbermayr also considers an incentive to save energy sensible. In particular, this would work with a “ceiling on electricity bills”: a household would receive a certain amount of “free electricity” – about 80 percent of the previous year’s consumption – the rest would have to be paid at the market price. According to Felbermayr, this is an active incentive to actually save energy.

Doubts about the electricity price ceiling
On the other hand, Felbermayr doesn’t think much of a general price cap for electricity, as is currently being discussed. State intervention would only shift the problem – this is evident, for example, from the example of the French energy supplier EDF, which now has to be subsidized by the state after a similar initiative.

“So I doubt you’re really riding the best strategy with an official requirement,” says Felbermayr.

Sanctions hit Russia very well
The economic researcher certainly does not see that the Western sanctions are heavier on the EU than the actual target Russia. While Austria’s economic growth has been reasonably balanced despite the crisis, Russia is likely to see a loss of eight to ten percent – ​​versus the eurozone it is expected to gain around two percent.

But in the winter you have to worry because “if there were actually no more gas, it could eventually cause a recession,” warns Felbermayr.

Source: Krone

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