Europe with an energy problema

Published in El Pais, 30 August 2022.

With the energy prices going up many people Europe are desperately looking for way to reduce the costs. This goes especially for the coming winter months. To have an idea on how severe it is. About a year ago an average family would pay 180 euros a month on average for gas and electricity. Now that same family will pay 700 euros a month. Needless to say that this is having a serious effect on family economics. On top of this companies are also facing higher costs of production and are increasing their prices. All kinds of products varying from bread to a visit to the swimming pool have increased. Inflation in Europe is around 11 percent, maybe not that impressive for people in Bolivia, but extremely uncommon for people used to 2% inflation.

First it is expected that people will just keep their houses colder in winter. Instead of a comfortable 21 degrees, people might settle for 18 degrees and compensate with an extra sweater and thicker socks. Another way people do to save money is to save on gas by burning wood. Currently chimney sweepers are very busy as many did not use them for quite a while and are rehabilitating them. The question is if the wood prices will remain lower than gas due to this. It is also feared that people will stop ventilating their houses to save on heating.

Needless to say this will have an impact on the environment and the health. Lower temperatures, bad ventilation and all the smoke of burned wood will causes health effects raising the medical costs, productivity loss and even causing deaths. Additionally, the smoke and contamination will accelerate climate change as it is more contaminating that burning gas.

The economist Maynard Keynes said: “that nothing helps high prices more than high prices,” meaning that if prices go high there are more incentives to increase the production or reduce demand or to find alternatives. There is no reason that it will not be happening now. For example people are investing in solar panels which believe it or not also work very well in the Netherlands. In this way people save on electricity which is generated by  gas which can then be used for heating. Many companies see this as a great challenge and opportunity, and I am curious what is coming.

The next year will probably be a tough one for many families, but fortunately people and resilient and creative.

About Arnold Hagens 296 Articles
Arnold Hagens is Economist with strong interest in technology, health and coaching

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