Jack Mintz: Panicky EU proposes its own National Energy Program
In the wake of spiralling energy prices, the European Commission is proposing something very much like National Energy Program Ottawa introduced in 1980 to reduce domestic energy prices to below international levels. It is meant to be temporary, lasting perhaps a year, but experience suggests market-distorting policies have a long life once in place.
The NEP remains deeply embedded in Western Canadian memories to this day. As a result of the 1973 Arab oil embargo and 1980 Iraq-Iran war, oil prices (in June 2022 US$) jumped from $25 in 1973 to $135 in 1980. Pierre Trudeau’s government wanted to protect consumers from international price hikes so it imposed an oil export tax that would cover subsidies to keep domestic oil prices below the international price.
Europe is now facing an energy crisis that will hit consumers and industry hard this winter. The EU’s flawed green policies were causing electricity prices to rise even before Russia’s unprovoked attack on Ukraine. Despite the collapse in energy prices after 2014 the average European household’s electricity price (including taxes) rose by almost half between 2008 and 2021, from €0.16 per kilowatt hour to about €0.23/kwh. After the Russian invasion of Ukraine, it jumped a further 30 per cent to €0.30/kwh.
Not only have electricity prices risen, so have oil, gas and coal prices, hitting business competitiveness hard. Unable to cover their costs, European producers of aluminum, fertilizer and manufactures are beginning to shut down operations and lay off workers.