The development of advanced economies in the direction of services has diverted our attention to what are the basic production factors, those that allow us to understand each other to eat and cover ourselves, and what elements this type of production needs in order to function: energy and raw materials.
Europe is not self-sufficient for either the former or the latter and therefore needs to import both. This hasn’t been a big problem for decades thanks to the abundance of these resources from overseas suppliers willing to supply them to us cheaply. Raw materials and energy are then used in Europe for internal consumption or for high-end industrial transformation.
For some time now the equilibrium of this economic circuit has gone into crisis and, although potentially there is still ample availability of energy and raw materials to be imported, the fragility of the global system of international relations is coming to the surface and problems are being generated that generate the expectation that supplies may decline in the future and it is above all this expectation that is generating real aberrations on the market which we then find in practice as disproportionate increases in the bill.
In fact, in the definition of prices, expectations count more than the actual availability of an asset: raw materials, including energy, are in fact treated with futures contracts, i.e. contracts that bind the seller to delivery after a certain time from the generation of the contract between parts.
The “artificial” explosion in the price of gas
In recent years we have had a number of factors that have fueled expectations of decreasing energy availability and, as there is enormous uncertainty about the solution to this possible state of scarcity, prices have begun to skyrocket despite, to date, there is no real lack of energy but only the expectation that this can materialize in the near future.
What is generating this shortage expectation? A series of factors, including long-term ones, including central ones are the sanctions that Europe has chosen to impose on Russia (major supplier of natural gas, and therefore of energy, for the old continent) which, with the continuation of tensions in Ukraine and the even more concrete possibility that an escalation may occur that goes beyond the Ukrainian borders, are an element that it is reasonable to think it will remain on the table for a long time to come.
Does it make sense for Europe to pursue this type of policy? The answer would seem no from any point of view, Europe simply has no possibility of maintaining its standard of living without Russian gas, neither in the short nor in the medium term (the only chance would be the discovery and diffusion of new energy sources. clean and abundant, none of this is even on the horizon).
The geopolitical logics (for which, at the moment, Europe is the simple soldier to be sent to the charge to take the bullets), however, are prevailing and we are literally building the conditions for which enormous resources will be drained from our pockets to incompressible energy consumption and huge portions of our economies risk collapse due to a simple shortage of the basic fuel of modern life: energy.
Why both light and gas increase and what will happen in the future
Gas and electricity prices are closely linked for one simple reason: a considerable share of the electricity we produce is generated by burning gas in power plants. It is a more than adequate choice given that gas is the least polluting of fossil fuels and has been cheap and abundant for a long time.
As we have seen it could still be cheap and abundant today and we cannot exclude the scenario that it will return soon after having hit the bottom of the crisis and having demonstrated, in fact, that the current international policies of European countries are not sustainable.
Unfortunately, it is not excluded that this awareness requires a military escalation, on the other hand also the permanence of too high prices for energy would have for Europe an effect similar to that of a war, saving itself only the damage of bombs and clashes in the field.
Can this price level last for a long time?
There has been a lot of talk about the mega profits of the big energy companies on this explosion of market volatility, even Minister Cingolani had already opened the case in March when price levels were far from current.
The big gas importers are making huge profits by exploiting the difference between theirs actual purchase price of gas and that then loaded into the bill, indexed to the value of gas on the TTF market (the famous Amsterdam stock exchange). In short, there is currently the opportunity, completely legal, to obtain enormous margins from this chaos on the energy market and certainly the failure of the government to intervene on this aspect on such a central and strategic issue, it would have been said once upon a time, is serious. for the nation. The most that has been done is to tax Eni’s extra profits, which in this way is actually done used as an indirect taxpayer of citizens and businessesa de facto operation similar to the RAI fee in the bill (just happens to be energy).
Such an absurd situation, the daughter of many crazy choices as we have seen, however, cannot last long without ending up punishing even those who, at the moment, may seem the winners.
Eni’s own extra-profits are only hypothetical until the money is actually collected and the current aberrated market condition, if it lasts too long, would create a chain of bankruptcies that would ultimately leave a significant share of inflated bills. don’t pay.
This phenomenon is already starting with the most fragile economic subjects (which in this crisis, unlike the previous one, there is obviously no interest in protecting), that is, small production companies and small local distributors, “crushed” by the spread between their price purchase and share of fixed price contracts signed.
The government’s attitude is unfortunately not surprising given that the Mario Draghi’s passion for Schumpeter it has been known for years, yet an excess of “creative destruction” risks collapsing the entire system and killing even the big fish.
This aspect, more than any other, leads us to think that a phase of returning to normal prices is not far off. This, however, after the hurricane created largely at the table unloads all its destructive power on the ground, this phase of the story, unfortunately, has just begun and in all probability will last throughout the autumn and a good part of winter. . All activities are at risk, including RSAs. At the very least, we will finally find out why there has been so much talk in Europe, for times not suspicious, of resilience.
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Why are electricity and gas bills increasing and when will they stop rising?
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