This is a column by BNR’s in-house economist, Han de Jong
While the government is offering citizens help with rising energy bills, Finance Minister Kaag never misses an opportunity to stress that this help will be limited. The government cannot go on. This in itself is a defensible argument. However, I have a feeling it’s very easy. Where do these high energy costs come from? Didn’t the government play an important role in the process whereby our energy self-sufficiency rate dropped sharply and we became heavily dependent on Russia? And who invented all those sanctions against Russia, which have a major impact on the lives of our own citizens?
I’m not actually pro-Putin, but I find it frustrating that our government apparently doesn’t go much further than warning that support is temporary, that we shouldn’t complain, that we should take a quick shower, turn down the thermostat, wear a must sweater and thermal underwear.
Problem
The current high gas price in Europe is a big problem, but we also need to think longer term. It makes a lot of difference whether the gas price returns to normal in the near future or stays structurally much higher than we used to and is also significantly higher than elsewhere. According to the futures market, the price of gas in Europe will remain above 100 MWh euros for the next year and a half. And ‘as far as the eye can see’ there will be no contracts in the futures market with a gas price even close to the pre-pandemic one.
What does it mean for us? And our ice rinks, for example? Should ticket prices increase significantly? Will there still be enough skaters? Or should we conclude that we can no longer afford artificial ice rinks and that they will disappear from our lives forever? Aren’t artificial ice rinks part of our cultural heritage?
Deindustrialization
What applies to ice rinks also applies, of course, to energy-intensive businesses. If they can keep their heads above water now, will they succeed in the long run? And if not, what does it mean for our economy? German chemical giant BASF has long warned that Europe’s chemical sector is doomed to current European energy prices. The company has announced that it will move operations from Europe to the United States. A process of deindustrialization is imminent. This is a serious threat to our economic future.
Is it incomprehensible that our policy makers seem to pay little or no attention to the question of how we can normalize energy prices as quickly as possible? Sure, I see many advocating for accelerating the energy transition. I fear that in the near future this will be completely insufficient. It really needs to be tapped from a different barrel.