Electricity and gas: economists reject price caps

AFaced with rising energy costs, many economists claim to ease the pressure on households. However, most German economics professors reject a cap for electricity and gas and instead rely on energy funds as transfer payments.

This is the result of the new panel of economists from 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 the questions.

The economists interviewed attach importance to the fact that aid should be provided primarily to poor families and not to all. 83% are in favor of further relief for households from high energy costs. 68 percent of these supporters are in favor of payments in the form of money for energy and only 14 percent for a cap on electricity and gas. A cap is to be understood as a state intervention through which prices cannot exceed a certain value.

For the Kieler Till Requate, it can only be a flat rate relief, which is less expensive. “A cap on electricity and gas prices would be the worst thing you could do now,” he wrote in the free comment field of the survey. Martin Biewen from Tübingen asked not to interfere with prices as indicators of scarcity. On the contrary, families and businesses in difficulty should receive lump sum transfers.

Nuclear power plants are expected to run longer

A week ago, the federal government announced a “defense shield” to support consumers and businesses due to rising energy prices. A gas and heat commission with economists and representatives of companies and unions will quickly present recommendations for the design of the gas price brake. SPD co-chair Lars Klingbeil announces their proposals after the state elections in Lower Saxony on Sunday. “Now everyone wants something to happen immediately, so do I, 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 massively.”

In addition to aid to families, the participants in the panel of economists propose a continuation of nuclear power. In order to expand the supply of electricity and gas in Germany, 81% of respondents support the continuation of the operation of the three remaining nuclear power plants beyond 2022.

driving effect of high prices

More than two thirds are in favor of the abolition of regulations that make the expansion of renewable energies more difficult, the construction of more liquid gas ports and the expansion of the electricity transmission network. “The electricity supply needs to be expanded and demand reduced,” said Ifo researcher Niklas Potrafke, who was involved in the survey. “Demand will not decrease due to energy price limits. Rather, the driving effect of high prices should be maintained and families and businesses in need should be helped with targeted payments. “

About two thirds are in favor of 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 signs of scarcity.”

Harald Fadinger of Mannheim advises on the one hand to relieve low-income households and energy-intensive companies through transfers, but on the other hand not to limit prices to provide incentives to save. He is also in favor of taking profits from energy companies to finance transfers. “Price caps and debt financing are coming instead,” he wrote.

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

Respondents clearly name the economic difficulties: 94% predict that Germany will slide into a recession due to the energy price crisis. 33% even expect power outages and rationing of electricity and gas in the winter. On the other hand, 47 percent do not expect shortages or rationing.

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