Dan Brouillette, who served as energy secretary under the Trump administration, said some of the measures European governments have taken to reduce electricity costs could be described as a “Ponzi scheme”.
Brouilette told CNBC’s Hadley Gamble on the sidelines of the Gastech conference in Milan on Monday: “One of the easiest policy levers if you want to, is you can go through the bill, get the money, and give the money to the cashiers,” he said. people to pay their electricity bills”.
Brouillette warns of the “inflationary impact” of such measures if governments adopt such policies to tackle price spikes.
Asked about whether such measures resembled a Ponzi scheme, Brouillette replied: “You could describe it that way. There’s no question about that.”
“It alleviates the immediate pain of not being able to pay for electricity, but money just moves in circles… It just goes from consumer to utility… it’s not a solution. permanent solution,” he added.
EU energy ministers will meet on Friday to discuss methods of curbing rising gas prices.
European gas prices jumped 30% higher on Monday after Russia announced that its main gas supply pipeline would be closed indefinitely. Europe in recent months has suffered a Gas exports from Russia plummetedtraditionally its largest energy supplier.
‘Produce more’
The former Energy Secretary said consumers can expect higher energy prices in the near term.
Oil markets around the world are “stretch” and there will be more oil used for heating and other purposes as winter approaches, Brouillette said. The prospect of an energy squeeze occurs when Saudi Arabia hints at cutting its oil production.
The answer to alleviating scarcity is to “produce more,” Brouillette says.
“If we can produce more, create more infrastructure development in the United States, in Europe – that is the ultimate answer to the questions.” He said it is important for the United States to return to pre-pandemic levels of production.
“We’re still short of about … one and a half million barrels a day from what we were producing just two and a half years, three years ago. So I think it’s very important that we go back. that number.”
Joseph McMonigle, Secretary General of the International Energy Forum, also said that oil supply is still lagging behind demand. “Many people think that the gap between supply and demand is all OPEC or OPEC+ but half of it is still from US producers,” he told CNBC.Capital connection“in Monday.
Brouillette added that it was a “strange request of [Biden] administration” to encourage U.S. oil producers to stop exporting and to prioritize American consumers.
U.S. Energy Secretary Jennifer Granholm recently urged the country’s refineries to limit fuel exports, and Build fuel storage instead of.
Brouillette said such a move is “impossible”, because the oil market is in a “retrograde” state. A spread is when the current price of a traded commodity is higher than its future price. That means manufacturers have more incentive to bring their products to market, he says. He added that publicly traded companies in the US have a fiduciary duty to their shareholders.
