• 4 minutes Energy Armageddon
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 10 minutes Russia Says Europe Will Struggle To Replace Its Oil Products
  • 5 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Reality catching up with EV forecasts
  • 4 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 3 days A Somewhat Realistic View of the Near Future for Electric Vehicles Worldwide
  • 13 days US Oil Independence is a myth and will always be a myth
  • 9 days The Federal Reserve and Money...Aspects which are not widely known
  • 14 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 17 days "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 17 days *****5 STARS - "The Markets are Rigged" by The Corbett Report

Spain’s Government Announces Tax Cuts To Battle Record Power Prices

Spain's Socialist-led government announced temporary tax cuts on power prices in an attempt to drive down household electricity costs, which have surged this summer and triggered outrage among working-poor, according to FT

Pedro Sánchez, Spain's prime minister, addressed the nation on Monday night to minimize political damage from the hyperinflationary rise in power prices. He said taxes on electricity would be significantly reduced, and energy companies would be taxed on their "extraordinary profits" and "redirected to consumers."

"We have made a firm commitment that all citizens will pay the same electricity bill [this year] as in 2018," Sánchez said, adding that energy companies' high profits are "not acceptable."

The emergency measures would reduce government revenues for 2021 by around 1.4 billion euros, he said, and 650 million euros will be taken from energy companies' profits and used to assist households. The new package is expected to be approved Tuesday. 

ADVERTISEMENT

The exponential rise in Spain's wholesale electricity prices shows no signs of abating. Prices jumped Tuesday to another record high of 172.78 per megawatt-hour. From the beginning of summer, prices are up more than 200%. 

One primary concern is the price of power rising as the summer season winds down and winter is ahead has become one of the most heated political issues. Sánchez is acting to alleviate consumers as record-high power prices eat away their wages. 

Angel Talavera, head of European economics at Oxford Economics, told FT, that "people are feeling the pinch in their personal finances but this is not a Spanish problem; it is a European if not a world problem." 

ADVERTISEMENT

"The issue is that, because of the different way the Spanish market works, much of the world has not noticed it yet, but sooner or later, a similar trend will happen in other countries," Talavera said. 

Some of the factors behind the soaring electricity and gas prices can be pinpointed to several factors, including increased gas demand by China, higher carbon prices, and reduced supply from Russia

Besides Spain, Germany, the UK, Netherlands, and Dutch have also seen explosive nat gas prices, which have caused power prices to surge. This is creating political pressure on European governments and European Central Bank President Christine Lagarde to get a handle on prices. 

Like it or not, and Europe doesn't want to admit it, they will soon be drooling over cheap Russian gas via the Nord Stream pipeline as a way to cap soaring gas and power prices. Politicians will do anything to get re-elected, even if that means taking Putin's gas. 

By Zerohedge.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

ADVERTISEMENT


ADVERTISEMENT


Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News