The current energy crisis, marked by soaring prices, is “comparable in intensity, in brutality, to the oil shock of 1973”, French Economy Minister Bruno Le Maire said on Wednesday, ruling out the hypothesis of a new “what whatever it costs”.
A second massive public aid plan, on the model of that at work during the Covid-19 crisis, “would only fuel the increase in prices”, indicated Mr. Le Maire in the preamble to a conference on energy independence, particularly vis-à-vis Russia, which brings together political leaders, business owners, energy specialists and economists.
“It would be like throwing gasoline on the fire,” said Bruno Le Maire, also taking the example of the strategy in the face of the oil shock of 1973.
“In 1973, that response caused the inflationary shock you know, led central banks to massively raise rates, which had killed growth,” he said. “It has a name, stagflation, that’s precisely what we don’t want to experience once more in 2022,” he said.
The Russian invasion in Ukraine has led to an explosion in oil and gas prices on the planet, the first currently evolving well above 120 dollars, not far from its historical records while the second has crossed unprecedented levels.
Europe is currently extremely dependent on Russian energy and is trying to find a solution for the next few months, at a time when prices are rising and the invasion in Ukraine has completely reshuffled the rules of trade with Moscow, once morest a backdrop of massive economic sanctions.
“The good answer that we know is total independence”, indicated Bruno Le Maire on Wednesday, shelling the French and European tracks passing in particular by more gas reserves for next winter, the diversification of supplies, and the protection of low-income households and businesses affected.
On the last point, the gas price freeze in France, which will be extended to the whole of the year, will cost “at least” 10 billion euros, said the minister, while the total bill for support for energy this year will be at least 20 billion although “it’s a safe bet that it will be higher”.
“The State cannot be the insurer of last resort of the increase in all energy prices”, however warned the minister.