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The current energy crisis cannot be left to the roiled market to sort itself out and will need smart government intervention by taxing the wealthier to shield the most vulnerable consumers, according to Shell’s chief executive Ben van Beurden.
“One way or another there needs to be government intervention,” van Beurden told the Energy Intelligence Forum in London on Tuesday.
“A government intervention that somehow results in protecting the poorest, that probably may then mean that governments need to tax people in this room to pay for it,” van Beurden said.
Last month, the European Commission, for example, said it would propose a revenue cap for companies producing electricity at a low cost and a “crisis contribution” from the extra profits of fossil fuel companies in a plan to raise $138 billion (140 billion euros) to cushion the energy crisis blow to European citizens and economy.
“These are all emergency and temporary measures we are working on, including our discussions on price caps,” European Commission President Ursula von der Leyen said in the middle of September.
At the London forum today, Shell’s van Beurden expressed doubts that oil and/or natural gas price caps would work and incentivize large LNG traders such as Shell itself to deliver more gas to customers.
“I struggle with understanding how effective an oil price cap on Russian oil will be,” van Beurden said.
“Intervening in complex energy markets is going to be very difficult. Governments need to consult with market experts on what they can and cannot do in terms of interventions,” he added.
A price cap on gas would be even more challenging, according to Shell’s outgoing CEO who is stepping down at the end of this year.
Van Beurden sees protecting the most vulnerable consumers as the better approach than a market intervention which will face tremendous challenges in its implementation.
Moreover, a price cap on gas would make Shell’s and other traders’ efforts to bring more LNG to Europe much more difficult.=
“We will do our best to bring gas to Europe where it’s needed, but if the market signal is not there it’s going to be really challenging,” said van Beurden.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,