Germany shames Chicken Charmers on energy

We will eventually be forced into subsidies but they won’t be funded by lifting taxes on the energy cartels. Not with Chicken Charmers in charge. They will be funded with public debt. That is, you will fund them.

Even more perversely, of course, we have a huge endowment of cheap energy fuels and Germany does not.

Goldman:

A plan to address the Energy Affordability Crisis.

If we were to keep the current gas and power forward curves constant, between 2021 and 2023 the increase in energy bills for Germany could cost more than €350 bn (c.€2 trn for Europe as a whole), or c.10% of German GDP, we estimate. Earlier today (September 29), Germany presented a €200 bn plan to contain the energy affordability crisis. The plan could offset nearly 60% of the above-described cost increase between 2021 and 2023. We think the plan could largely eliminate energy cost increases for the coming 18 months, thus largely alleviating the burden on families and corporates. This measure appears somewhat similar to the recent plan announced by the UK

…Implications for Southern European regions? In light of Germany’s plan, we await updates on the European affordability solution, as seen during the Covid crisis (eg, the EU Recovery Fund). A country-by-country approach could imply ongoing energy affordability risks in certain Southern European regions. The measures suggested include:(i) power price caps on infra-marginal technologies, as recently suggested by the EU (we do not know if at €180/MWh or lower yet); (ii) gas price cap to contain the increase in gas bills; (iii) new legislation to speed up the approval time of renewable projects; (iv) taxes on oil, gas and mining industries; and (v) lower VAT on bills.

Meanwhile, at home, the gas price is sitting at just under $20Gj:

This price is enough to deliver a CPI spike of around 3% and 5% over two years.

International prices have come down a little with futures pricing $66Gj in January:

Albo’s gas whale has given the cartel approval to lift to these prices. But, it is now playing a very dangerous game of chicken with the Aussie economy, trading higher prices for lower social licence to operate as manufacturing goes bust.

My best guess at what happens from here is that the cartel ramps the price using any and every exogenous shock for cover.