Germany: High Oil Prices are Painful for Us too!

In Germany, soaring oil prices are having a knock-on effect on the price of natural gas, which many households use for heating. Deputy Environment Minister Michael Müller said at the weekend that natural gas prices in Germany could see an increase of up to 40 percent in autumn. That would come on top of an upcoming 25-percent increase in natural gas prices which was already announced in May. The price of natural gas in Germany is tied to the price of oil in contracts agreed between gas exporters such as Russia's Gazprom and German importers.

Of particular concern to many German politicians is the effect of high energy prices on the poor, who they fear will no longer be able to afford to heat their houses. German Environment Minister Sigmar Gabriel called Monday for the introduction of special "social" energy price rates for low-income households. He also called for the price of natural gas to be decoupled from oil prices. "We need to give up the oil drug and the gas drug," Gabriel said.

It was a sentiment echoed by commentators writing in Germany's newspapers Monday. They were unanimous in calling for greater independence from oil, with some even calling for an "energy revolution."

The Financial Times Deutschland writes:

"The post-millennium world is a very different place today than it was in the 1970s. The Europeans are freer to act in terms of monetary policy. In the 1970s, their individual currencies were tied to the dollar, which meant they effectively imported inflation from the other side of the Atlantic. These days, the value of the euro is determined by the market and an independent central bank. For that reason alone, a return of excessive inflation is unlikely."

"Nevertheless, the importance of oil as a factor of production is still central enough to justify the recession warnings, even if the alarm bells are ringing a little too shrilly vis-à-vis inflation. Even if the industries in developed counties are more efficient than there were 30 years ago, the economy has not experienced a genuine turnaround in terms of energy. The International Energy Agency recently calculated what an energy revolution would cost, coming up with the figure of $45,000 billion by 2050. For many, climate protection may not be a sufficient argument to justify investments on this scale -- but perhaps the high oil price is."

The financial daily Handelsblatt writes:

"It is very tempting to blame speculators (for high oil prices). And not only politicians, but also many economists, have succumbed to that temptation."

"But why are people getting so worked up about speculators? It's very simple -- because they are a convenient scapegoat. It's convenient for politicians, who have neglected to reduce dependence on fossil fuels; for OPEC, who can continue to fill their coffers without fear of interruption; and for the oil companies, as it distracts attention from their own failures."

"But every dollar by which the inflated oil price rises has its good side -- it accelerates the unavoidable adjustments. It is therefore good that the energy ministers of the G-8 are concentrating on putting their own house in order. The time for excuses is past. Oil consumers must use the pain of high oil prices to bring about a revolution in energy policies."

The center-left Süddeutsche Zeitung writes:

"The G-8 states want to learn from each other how they can get by with less energy. Given the recent developments, that doesn't sound like very much. But it is probably the smartest thing that those countries could do. Anything else would fail."

"The solution … can't be put off any longer. The industrialized states will need to make themselves independent from the very resources that fueled their industrialization. They will need to build better houses and heat them with less fuel. They will need to develop better cars which need less gasoline. If that is the result of the record prices, and if the world can manage to go down this road without a colossal recession, then this latest development will even have had a good side."

The conservative Die Welt writes:

"The price of oil is now approaching that invisible threshold above which the question of future energy supply turns into a social question. Gasoline and kerosene threaten to become unaffordable for low-income social groups. Mobility will become a luxury, as will heating -- the Environment Ministry is already warning that the price of natural gas could increase by up to 40 percent in autumn as a result of rising oil prices."

"Hope lies in abstinence. Germany has already succeeded in uncoupling, to a relatively large degree, its economic performance from energy prices. Now the focus has to be on further increasing this degree of independence from oil through increases in efficiency and energy saving measures. If this succeeds, the signal could even drive speculators away from the oil market -- and allow the price to fall again."

The left-leaning Die Tageszeitung writes:

"Those who are calling for natural gas prices to be uncoupled from oil prices are practicing pure populism. … The two prices are simply dependent on each other, because when oil prices are high then consumers increasingly switch to natural gas, which then becomes expensive due to the extra demand. Just as populist are calls for a reduction in taxes on oil or other energy taxes, to balance out the increases in prices.

"All these measures do not solve the problem, namely that fossil fuels are becoming scarce. In this situation, only one thing can help -- lowering consumption. The market economies in which we live have a simple instrument to bring that about, namely higher prices."

-- David Gordon Smith, 12:30 p.m. CET