Romania’s placement at the top of price growth at the European level, according to Eurostat data, destroys the widely held opinion that prices have risen everywhere and it is connected with the international situation. The fact that in Romania these prices rose much higher than the European average shows that in a country like Romania, where more than 90% of electricity and gas is produced domestically, the main reasons were internal.

More than a year ago (January 31, 2022), we showed that Romanians are still doomed to take money out of their pockets due to increased bills or increased taxes!. At that time, the first solution was chosen, finding a way to attract funds to the state budget by implementing measures to stimulate the price increase of gas and electricity. But since that moment, the needs of the state have increased and other money is needed, on the one hand due to the refusal to change the raised price ceilings for gas and electricity (to maintain a high price for the final consumer) and on the other hand. the other – new taxes that will apply to Romanians.

Price increases from 2021 were supposed to provide “sufficient” resources for the state budget until the 2024 elections, while a delay in excessive taxation was probably desirable, but the fall in global energy prices and the too long arm of government spending make it necessary to raise taxes already this year. The receipt of money to the state budget is normal, if this money is spent in the interests of citizens (hospitals, highways, roads, etc.), and its collection is carried out transparently (for example, without resorting to raising prices for communal services). ).

As we showed in the analysis of February 15, 2022 – How did gas become more expensive? An amendment to the Romanian legislation, in June 2020, introducing an obligation for gas suppliers not to sell all the gas created a false demand for gas higher than the supply, thus starting the process of increasing the price of natural gas in Romania October 2020. It is important to see the statistics , which shows that in 2020, when prices were falling in Europe, they were rising in Romania. In the second half of 2021, when gas prices in Romania already had an upward trend for 6 months, they began to increase the price in Europe as well.

The second moment when the authorities’ actions “raised” the price was the capping law in October 2021, when the authorities set a base price of 370 lei/MWh, which is 2.4 times higher than the 2020 price. 1.8 times higher than the September 2021 price. If before the establishment of this reference price by the state, the price offer for the domestic consumer was 220 lei/MWh, then after the “permission” given by the state to suppliers to sell gas at 370 lei/MWh, the price offers quickly exceeded this value.

This is evidenced by the calculations in the table below, which shows the purpose of money paid by consumers for gas consumed over the past 3 years:

In two years, the state has increased revenues from gas price increases by 60 percent, but more money is needed.

We warned on 25 February 2022 that the government’s measures to reduce the price of gas would lead to an increase in prices for consumers of up to 130% (see here). Today we are surprised when Eurostat shows that the price of gas in Romania has increased by 165%.

N. Ed: Dumitru Kiselice is the president of the Intellectual Energy Association