European Energy

With European energy prices stratospheric, the pressure on governments to intervene is profound. However, all solutions aren’t equal. Capping prices is the worst solution; it encourages consumption by making energy artificially cheap. A subsidy on the amount of energy consumed by the median household is OK, it discourages demand beyond the subsidized quantity. Ideally, give sufficient cash to poor households. Price signals are maintained and fear of freezing is eliminated.