Thursday, December 1, 2022

Latest Posts

Serious mistakes in the gas price brake: whoever saved is a fool

The Gas and Heat Commission has made a proposal on how to bear the high energy costs, but has made serious mistakes.

It’s kind of weird when experts apologize for their experience as soon as they’ve posted it. “Certainly not perfect” is the proposal, the co-president and president of the Federation of German Industries, Siegfried Russwurm, justified the expert opinion on the gas price cap.

His colleague in the presidency, the leader of the chemical union Michael Vassiliades, complained that it was not fair even in individual cases: “It breaks my heart.” And the sober third chair of the commission, business expert Veronika Grimm, succinctly decided that the matter was “pragmatic.”

You are all right and wrong. Because the provisional decision of the Gas and Heat Commission to give the change to the citizens is fervent. In its preliminary variant, it gives almost no incentive to save. It relieves everyone and is therefore much more expensive than necessary, instead of only supporting those who can no longer pay their bills.

The Commission has an impossible time pressure. Even if she knew it

The federal government already at the outbreak of the war in February, at the latest with the first and second package of reliefs (tax relief, fuel discount, energy cost subsidy, 9 euro ticket) in the spring, must find a resilient solution. But he didn’t convene his “commission of independent experts” until the end of September (after the third package) – and he immediately gave a lot of impetus to professors, business leaders, association presidents, union leaders and energy experts.

The Chancellor has asked for the Council to be in force by mid-October. Although the nominees immediately got to work, the commission was “unusually constructive and focused work,” as the attendees reported, it was clear: quickly and with concrete government specifications (a price cap, and soon !) a tentative, flawed and not at all means that an independent solution may be feasible.

Under these circumstances, the result is impressive, at least as far as consumer facilitation is concerned. The December concession and the price cap for next year should cost almost 100 billion euros.

Everything is to be financed with the new public debt, which the finance minister wants to park in a new special fund. But the Commission does not provide an answer to the more difficult question: how private households are likely to save twenty percent of their consumption so that gas does not run out.

The likelihood of strict savings behavior decreases with the amount of state subsidies. If you turn off the price as a signal, you need to use other tools to make sure citizens get a towel and not a hot shower.

Hoping that sufficient savings will be made without drastic measures would be as naïve as betting on an unusually warm winter. How the measures should be remains unanswered.

The doctrine of getting something is also mainly due to the haste with which the Commission had to negotiate. Now even the rich and the spendthrift will be relieved. Those who have made themselves particularly comfortable in recent years will receive more subsidies than responsible people who have already saved up in recent winters to protect the climate and their wallets.

Those who keep the old gas burner running in the basement get more than those who invested in modern condensing technology. This is neither fair nor social: because for those really affected, December aid may be too low to save them from insolvency.

It wouldn’t have been necessary. Because the chairman of the commission, Veronika Grimm, among all, had already presented an expert opinion on the possible reimbursement of the CO2 tax in the spring.

Scientists have found that not only low-income groups but also some middle-income groups can be particularly affected by rising fossil fuel costs. This is true, for example, for families in the country who live in large, poorly renovated houses and have to cope with long journeys.

This report would also serve as a model for a reasonable brake on gas prices. With a little less pressure, the panel of experts could have developed a system to identify families particularly under pressure in national emergencies and provide them with help. And only them.

Future federal governments would probably be infinitely grateful. And it would have been easier for committee chairs to support their work.

Ursula Weidenfeld is a business journalist based in Berlin. Her new book is called: Chancellor. Portrait of an era.

The Gas and Heat Commission has made a proposal on how to bear the high energy costs, but has made serious mistakes.

Latest Posts

Don't Miss