Electricity and gas: economists reject price caps

AIn light of rising energy costs, many economists are arguing for taking the pressure off households. However, a majority of German economics professors reject a price cap for electricity and gas, relying instead on energy funds as transfer payments.

This is evident from the new economic panel of the Ifo Institute in Munich and the FAZ. This time, 178 economics professors from German universities took part in the regular survey, although not all participants answered all questions.

The economists surveyed attach importance to the fact that aid should be given mainly to poor households and not to everyone. 83 percent are in favor of further alleviation of high energy costs for households. 68 percent of these supporters are for payments in the form of energy money and only 14 percent for a price ceiling for electricity and gas. A ceiling is understood to mean state intervention where prices are not allowed to exceed a certain value.

For the Kieler Till Requate it can only be a lump sum exemption, which is cheaper. “A price cap for electricity and gas would be the worst thing you can do right now,” he wrote in the survey’s free comment box. Martin Biewen from Tübingen demanded that prices as indicators of scarcity should not be affected. Instead, households and businesses in need should receive a lump sum payment.

Nuclear power plants have to run longer

A week ago, the federal government announced a “defense shield” to support consumers and businesses amid rising energy prices. A commission for gas and heat with economists and representatives of companies and trade unions must quickly make recommendations for the design of the gas price brake. SPD co-chair Lars Klingbeil will announce their proposals on Sunday after the state elections in Lower Saxony. “Everyone now wants something to happen right away, I want that too, but I trust the experts who will present a smart model next Monday,” Klingbeil told ZDF on Thursday. The measure will “really push prices down”.

In addition to helping households, the participants in the panel of economists propose a continuation of nuclear energy. To expand the electricity and gas supply in Germany, 81 percent of those polled support continued operation of the three remaining nuclear power plants after 2022.

driving effect of high prices

More than two-thirds are in favor of removing regulations that make it more difficult to expand renewables, building more ports for liquid gas and expanding the electricity transmission grid. “The supply of electricity needs to be expanded and the demand reduced,” said Ifo researcher Niklas Potrafke, who was involved in the study. “Demand will not fall due to energy price caps. Instead, the driving effect of high prices should be preserved and needy households and businesses should be helped with targeted payments.”

About two-thirds are for creating savings incentives for households and businesses. Silke Übelmesser from Jena wrote: “Whatever the concrete form of the measures, they should address the consequences of the distribution policy as specifically as possible and not distort relative prices, which are important signals of scarcity.”

Harald Fadinger from Mannheim advises on the one hand to relieve low-income households and energy-intensive companies by means of transfers, but on the other hand not to capture prices to provide savings incentives. He is also in favor of transferring profits from energy companies to finance the transfers. “Price caps and debt financing will come in their place,” he wrote.

At 54 percent, a narrow majority is in favor of further relief for companies. The approval is lower here than for domestic help. The professors are divided on whether there should be an excess profit tax or an arbitrary profit tax for producers of renewable energy, nuclear and coal power: 46 percent support the project and 43 percent oppose.

The respondents clearly mentioned the economic difficulties: 94 percent expect Germany to enter a recession as a result of the energy price crisis. 33 percent even expect power outages and rationing of electricity and gas in the winter. In contrast, 47 percent expect no shortages or rationing.

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