Gas bills in Germany will remain high despite price cap, warns economist
Germany is planning to bring in a cap on the price of gas for consumers. But a leading economist has warned that energy prices will still remain high. What can we expect?
The German government last week announced a €200 billion relief package to help support private households and companies with spiralling energy prices.
As part of the plans, a gas price cap is set to come into force in Germany, limiting the amount that people pay to use gas amid rocketing prices.
The details on how it will work are still being thrashed out. But chairwoman of the gas price commission, Veronika Grimm, has dampened expectations for how big an effect the cap will have on energy bills.
"We will permanently end our dependence on Russia," the economics professor at the University of Erlangen-Nuremberg told the newspapers of the Funke Mediengruppe.
"So the gas price will remain significantly higher than before the Russian invasion of Ukraine due to higher liquid gas procurement prices - despite a gas price cap."
Grim suggested that the gas price cap could be in the form of a one-time payment to encourage people to continue using less gas.
"It will be important to maintain a high savings incentive," she said. "With a one-time payment, that would clearly be the case.
"You would have a much lower incentive to save if you lowered the price of gas by a certain percentage."
On Thursday the Federal Network Agency warned that people in Germany are using too much gas.
"Gas consumption rose too sharply last week," said Klaus Müller, head of the agency.
He said gas usage among households and small firms was nearly 10 percent higher last week than the average consumption for the years 2018 to 2021.
"The situation could become very serious if we do not significantly reduce our gas consumption," said Müller.
Meanwhile, economist Grimm slammed the time pressure that the gas price commission panel was under. The commission is to present proposal to policymakers on how a gas price brake could work in the coming days.
"The decision to convene such a body could have been made a few months ago; after all, the development in gas prices was foreseeable," Grimm said.
READ ALSO: German households see record hikes in heating costs
Vocabulary
One-time payment - (die) Einmalzahlung
Gas price cap/brake - (die) Gaspreisbremse
Significantly higher - deutlich höher
Foreseeable - absehbar
We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.
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The German government last week announced a €200 billion relief package to help support private households and companies with spiralling energy prices.
As part of the plans, a gas price cap is set to come into force in Germany, limiting the amount that people pay to use gas amid rocketing prices.
The details on how it will work are still being thrashed out. But chairwoman of the gas price commission, Veronika Grimm, has dampened expectations for how big an effect the cap will have on energy bills.
"We will permanently end our dependence on Russia," the economics professor at the University of Erlangen-Nuremberg told the newspapers of the Funke Mediengruppe.
"So the gas price will remain significantly higher than before the Russian invasion of Ukraine due to higher liquid gas procurement prices - despite a gas price cap."
Grim suggested that the gas price cap could be in the form of a one-time payment to encourage people to continue using less gas.
"It will be important to maintain a high savings incentive," she said. "With a one-time payment, that would clearly be the case.
"You would have a much lower incentive to save if you lowered the price of gas by a certain percentage."
On Thursday the Federal Network Agency warned that people in Germany are using too much gas.
"Gas consumption rose too sharply last week," said Klaus Müller, head of the agency.
He said gas usage among households and small firms was nearly 10 percent higher last week than the average consumption for the years 2018 to 2021.
"The situation could become very serious if we do not significantly reduce our gas consumption," said Müller.
Meanwhile, economist Grimm slammed the time pressure that the gas price commission panel was under. The commission is to present proposal to policymakers on how a gas price brake could work in the coming days.
"The decision to convene such a body could have been made a few months ago; after all, the development in gas prices was foreseeable," Grimm said.
READ ALSO: German households see record hikes in heating costs
Vocabulary
One-time payment - (die) Einmalzahlung
Gas price cap/brake - (die) Gaspreisbremse
Significantly higher - deutlich höher
Foreseeable - absehbar
We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.
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