Some of the measures that European governments have taken to maintain electrical energy prices down will be described as a “Ponzi scheme,” stated Dan Brouillette, who served as vitality secretary beneath the Trump administration.
“One of the easiest policy levers if you will, is that you can pass a bill, appropriate money and give money to citizens to pay their electricity bills,” Brouilette advised CNBC’s Hadley Gamble on the sidelines of the Gastech convention in Milan on Monday.
He warned that such measures might have an “inflationary impact.”
When requested about whether or not such measures resemble a Ponzi scheme, Brouillette replied, “You could describe it that way. There’s no question about that.”
“It alleviates the immediate pain of not being able to pay the electricity bill, but the money just moves in a circle … It just goes from the consumer to the electricity company … it’s not a long-term solution,” he added.
The EU international locations’ vitality ministers will meet on Friday to debate strategies to manage surging gasoline costs.
Europe’s gasoline costs jumped 30% larger on Monday after Russia introduced that its principal gasoline provide pipeline would stay shut indefinitely. Europe in latest months endured a pointy drop in gasoline exports from Russia, historically its largest vitality provider.
‘Produce extra’
The former vitality secretary stated shoppers can count on larger vitality costs within the close to time period.
Oil markets world wide are “very tight,” and extra oil goes for use for heating and different functions as winter approaches, stated Brouillette. The prospect of an vitality squeeze comes as Saudi Arabia hints at chopping its oil output.
The reply to assuaging the shortage is to “produce more,” stated Brouillette.
“If we can produce more, create more infrastructure development in the United States, in Europe — that is the ultimate answer to the questions.”
He added that it is vital that United States return to pre-pandemic ranges of manufacturing.
“We are still roughly … a million and a half barrels short per day of what we were producing just two and a half, three years ago. So I think it’s very important that we get back to that number.”
Joseph McMonigle, secretary-general of the International Energy Forum, additionally stated that oil provide continues to be lagging behind demand. “A lot of people think the gap between supply and demand is all OPEC or OPEC+ but half of that is still from U.S. producers,” he advised CNBC’s “Capital Connection” on Monday.
Brouillette added that it was a “strange request by the [Biden] administration” to encourage U.S. oil producers to cease their exports and prioritize American shoppers.
U.S. vitality secretary Jennifer Granholm just lately urged the nation’s refiners to restrict gas exports, and to construct gas inventories as a substitute.
Brouillette stated such a transfer is “impossible,” as a result of the oil market is in “backwardation.” Backwardation is when the present worth of a commodity is buying and selling larger than its futures worth. That, based on him, signifies that producers have extra incentive to place their product within the market. He added that publicly traded corporations which might be in America have fiduciary duties to their shareholders.
Source: www.cnbc.com”