Europe at the Crossroads of Hunger and Freezing
The global inflation crisis, resulting from rising energy prices and other essentials of civic life, has gripped many countries. Even though there are positive and acceptable signs of reduced inflation rates in some countries, particularly the USA, the reduction, although slight, does not mean prices are decreasing.
It simply means that the rate of price increase is slowing down, and things are getting more expensive at a slower pace. The significant rise in the prices of goods and services is largely due to the increase in energy prices following Putin’s invasion and occupation in Ukraine. Russia has its foot on the neck of global livelihoods and continues to apply pressure. Europe sees itself at the forefront of the battle with Putin, and behind the scenes of the Russian-European confrontation, citizens of various countries on the continent are thinking about winter amid unprecedented heatwaves.
Price Increases, Energy Companies Getting Rich, and the Price Cap Crisis
The price increases naturally delighted the managers of oil and gas companies the most. Companies like Shell, Centrica, and Total reported unprecedented revenue and net profit figures. Total made headlines in France by tripling its profits, breaking records, and surpassing forecasts.
Norwegian company Equinor, for instance, paid an additional $3 billion to shareholders before the end of July. The rising prices, along with the constant news of profits by European energy companies, united EU officials to impose special taxes on these companies, and a serious proposal was registered in the European Parliament at the end of June.
In the UK, the story was different. The political crisis stemming from Boris Johnson’s scandals and disgrace, which led to his resignation, left behind a weak interim government. The election race to choose Boris’s successor was intertwined with discussions about rising prices and the skyrocketing cost of winter heating.
The two final candidates, with their differing policies on how to combat these price increases, fueled concerns. There is almost no hope for citizens that whichever of the two final candidates becomes Prime Minister will keep the energy price cap stable or fully compensate the growth through direct payments to the people. The UK has never been as reliant on energy exports from Russia as countries like Germany, and all Russian imports were reduced to zero in June. Continuous news about the living concerns for the winter shakes the British not day by day but hour by hour.
Battle with the Russians, Gas Saving, and Price Cap
The European Union designed a comprehensive and special program to save on energy prices, initially announcing its implementation voluntarily so that different countries could execute it based on their conditions. The mandatory implementation of the saving plan does not have a serious outlook, yet the saving plans of countries like Germany have been astonishing.
Implementing policies to cap and floor the heating levels of public places and officially setting the desired temperature on one hand, and reducing the lighting hours of public places and streets at night on the other, have been part of this policy. The heartbeat of European countries dependent on Russian imports rises and falls with each fluctuation in the gas flow in the pipelines, and meanwhile, subtleties and intricacies in supporting Ukrainians must be observed so that Putin does not get angry and cut off the gas altogether.
The good news for Germans is that their government has been successful in storing gas and has reached the desired level ahead of schedule. Most European countries are interconnected in energy networks, and to strengthen its position against Putin and eliminate the risk of strategic weakness, the EU has enacted a formal law mandating gas storage and making storage facilities strategic.
Countries like Germany have taken serious steps in successfully implementing this plan. In any case, full gas storage does not remedy the price increase. The future of European livelihoods looks bleak, and a solution must be found for the rising prices.
Naturally, implementing a policy to keep prices stable under current conditions means that governments must pay the difference to energy companies in various ways. Even if tax increases target the affluent classes and large companies, they will ultimately lead to price increases in various sectors in the medium and long term.
The British Labour Party, amid the Conservative Party’s election turmoil to determine Boris Johnson’s successor, proposed the energy price stabilization plan, which would be funded in various ways, with the release of alarming reports and research about British winter livelihoods.
Interestingly, no conservative politician explicitly calls for serious and special taxes on energy companies, and their maximum alignment is with limited tax increases on British energy giants. Overall, even this Labour Party leader’s plan was described by many as fanciful, and some criticized the imposition of costs on the public budget, pointing out that the wealthy do not need help, and there is no reason for their energy costs to remain fixed.
We must wait for the new government with a new Prime Minister in the UK to see their policies regarding the crisis. Boris Johnson has spent the recent weeks on a vacation in Greece. New research indicates that, at best, if they do not consider price caps, 25% of Britons will never turn on home heating in the winter of 2023, caught between the costs of food and heating.
The European Union’s program to tackle energy prices has entered a new phase. The Czech Republic, as the rotating presidency, has announced an emergency meeting of energy ministers of member countries. In Brussels, the Belgian Energy Minister has called on all EU member countries to quickly design and announce an emergency and executable program to stabilize energy price caps in these countries.
The Belgian minister warned that the time for promises and talk is over, and the moments for immediate action have arrived. He predicted that without setting a price cap, Europeans face harsh winters in the next five or even ten years. Many in Europe, especially in the UK, will find themselves at a crossroads between heating their homes and feeding themselves if no policy is devised.
