As the European winter approaches, European governments are “throwing away more and more money” in an attempt to cope with challenges, while attempts to wean themselves off Russian hydrocarbons are “fading” into the background.

Despite all the talk of rapid self-sufficiency and finding alternative sources of oil and gas, supply remains limited… and prices are rising.

The Organization of the Petroleum Exporting Countries (OPEC) announced yesterday a reduction in oil production, albeit a small one. Moscow, for its part, said on the same day that it intended to keep the Nord Stream 1 gas pipeline “closed” until the sanctions imposed by Western countries on Russia over the war in Ukraine are lifted.

As energy prices remain high and gaps remain in energy sufficiency from alternative sources of supply, governments in the European Union and the United Kingdom are now realizing that they will have to work harder to be able to “compensate” affected households and businesses. , Bloomberg notes in its analysis.

At least 376 billion euros

“European households will receive state assistance in the amount of at least 376 billion euros curb exorbitant energy bills this winter, but there is a risk that even this amount will not bring sufficient relief. bloomberg.

Chancellor Olaf Scholz’s coalition government in Germany has agreed an aid package of around 65 billion euros to support households and businesses, though many inside Germany are protesting that even that is not enough.

Even in the United Kingdom, where Liz Truss was elected to the leadership of the ruling Conservative Party promising tax cuts, the plan she is now expected to present as the new prime minister will be, according to Bloomberg, a plan to freeze electricity and natural gas bills, but at current levels. Cause the plan is expected to cost $150 billion at 18 months.

However, despite proposed energy conservation measures, demand is unlikely to slow to the point that it offsets supply problems. Conversely, limiting the price of household electricity bills in practice may even lead to an increase in demand.

Government balance sheets, already burdened by the pandemic, now face new challenges. The already difficult debate about raising taxes or cutting spending is now once again put on hold by the urgent need to keep households and businesses out of energy poverty and collapse.

“The governments of the EU member states they spent more than 280 billion euros without having time to contain the prices,” we read in a recent article-analysis in “K”.

As for long-term energy solutions, it will take years to move from theory to practice.

However, in such a context,politicians of all stripes should throw fiscal discipline out the window“as Bloomberg notes in its analysis. “Putin’s legacy may actually be a fiscal cliff, but that will happen after his war in Ukraine ends.“.

Indicators, amounts and percentages by country

ITALY

On average, a household saw a 91% increase in electricity prices and a 71% increase in gas prices in the 12 months ending October compared to the previous 12 months. The government of Mario Draghi has imposed a ban on changing the terms of contracts for some clients until April. The cost of energy is a major issue ahead of the September 25 elections.

UNITED KINGDOM

Most households will see their energy prices almost triple from last winter starting October 1, after regulator Ofgem increased the cap on what suppliers can charge. The government promises more support to the poorest sections of the population. New Prime Minister Liz Truss is forced to do more.

GERMANY

According to the Check24 website, household bills rose by an average of 185% in August compared to last year. Measures announced by the federal government include:

• Obligations to limit and redistribute profits of the energy company
• Increasing payments to families, the elderly and the unemployed
• Actions to limit the rate of price growth

FRANCE

The government is limiting electricity price increases for homes that use electricity rather than natural gas for heating.

Natural gas prices offered by Engie SA were frozen in October 2021 thanks to government subsidies.

In February, Electricite de France SA imposed a 4% cap on annual electricity price increases for households and small businesses.

NETHERLANDS

The government is working on a support plan of up to 16 billion euros aimed at easing the burden on consumers. There are no restrictions on household accounts, about 90% of clients have variable contracts, and supplier companies are private.

Essent NV and Vattenfall AB’s standard annual contract jumped to €5,000 in August from €2,000 last year, according to Dutch newspaper NRC. The government plan being developed includes:

• Increase the minimum wage by 10%
• Reduced Energy Taxes
• Subsidies for poor households
• Introduction of a contingency tax for fossil fuel companies

SWEDEN

Ahead of the September 11 elections, Prime Minister Magdalena Andersson pledged some 6 billion euros to help those hardest hit by rising costs.

There is no price cap, and the government stresses that the easiest way to save money is to use less energy.

DENMARK

There is no upper limit on the price of energy, but the municipal government owns a controlling stake in most energy supply companies. According to Danske Bank, a household using natural gas for heating will pay about 5,075 euros this winter, about 70% more than last year.

Denmark has started allocating 6,000 crowns (about 800 euros) to low-income citizens dependent on natural gas.

PORTUGAL and SPAIN

Significant interventions in the wholesale market in Spain and Portugal have helped drive down energy prices by limiting the cost of natural gas included in the calculation. As a result, the prices charged by suppliers, which are private companies, have remained relatively stable compared to last year, with an increase of no more than 1-2% in Portugal.

Spain has reduced taxes on electricity bills. Portugal has reduced the tax on fuel and allowed small businesses to switch to regulated cheaper gas rates. It is also planned to reduce VAT to 6% from 13% for a certain amount of electricity use.

Poland

Nearly all suppliers are controlled by the government, as are the prices paid by households, which are subject to the existing government regulatory framework. Companies submit proposals for tariff increases to the competent supervisory authority, which decides on the upper limit for the following year. The amount for 2023 should be known by mid-December. The regulator warned that bills could rise by 180% if the government does not act. The government approved around €629 per household to mitigate the impact of more expensive coal. At the same time, the possibility of introducing an emergency tax (tax on windfall profits) is being considered.

ELLAS

The government started subsidizing the accounts in September 2021. This month, Greece will cover 94% of the increase for most households, with the poorest of them receiving nearly 100% support. These subsidies amount to 1.9 billion euros, compared to about 1.1 billion euros last month.

Greece currently spends the equivalent of 3.7% of its GDP on protecting households and businesses, the highest of any other EU country, according to the Brussels-based Brueghel Institute.

IRELAND

State-owned Electric Ireland has raised prices at least four times in twelve months in a country that has no restrictions on consumer bills. Ireland is exempt from EU consumption requirements because it gets 3/4 of its gas from the UK. The government is urging consumers to “cut back”.

State measures include: lending and reduction of VAT on promissory notes (up to 9% from 13.5%).

At the same time, the possibility of imposing an emergency tax on energy companies is being considered. In addition, the possibility of helping home owners with the cost of insulation is being considered.

AUSTRIA

The government is focused on helping consumers, not intervening in the market. It slashed more than €1,000 in checks in June and adds another €500 “bonus” in the third quarter. Households and businesses will receive at least €6 billion this year and next in benefits, with an additional €22 billion planned for lower taxes by 2026.

The state-owned Verbund AG is lobbying for the separation of European electricity prices from the natural gas market.

Czech Republic

There is no cap on electricity bills, and some contracts are up 650% from last year. The government is considering introducing an emergency tax on producers and is focused on taking full control of the power plants of the largest utility company CEZ AS, 3/4 of which it already owns.

According to Bloomberg