While the Russian invasion of Ukraine has led to an explosion in oil and gas prices on the planet, the French government is trying to find the best way to respond to this soaring price.

To do this, Bruno Le Maire intends to draw inspiration from past crises.

For the French Minister of the Economy, the current energy crisis is indeed "comparable in intensity, in brutality, to the oil shock of 1973", he declared on Wednesday.

In order not to repeat the same scenario, a “whatever it costs” policy, equivalent to that applied during the Covid-19 crisis, should be discarded.

Indeed, a second massive public aid plan “would only fuel the increase in prices”.

"It would be like throwing gasoline on a fire," he told a conference on energy independence, bringing together politicians, business owners, energy specialists and economists.

Avoid stagflation

Bruno Le Maire then recalled that during the oil shock of 1973, Western countries "had engaged in an expansionary budgetary policy and massively supported demand".

“This response caused the inflationary shock that you know, led central banks (…) to massively raise rates, which had killed growth,” he said.

“It has a name: stagflation.

This is precisely what we do not want to experience again in 2022,” he said, adding that “we need to be more inventive.”

Europe is currently extremely dependent on Russian energy at a time when prices are rising and when the war has completely reshuffled the rules of trade with Moscow.

"The good answer that we know is total independence", continued Bruno Le Maire, proposing as avenues more gas reserves for next winter, the diversification of supplies, as well as the protection of low-income households. and businesses affected.

On the last point, the freeze on gas prices in France, which will be extended to the whole of the year, will cost "at least" 10 billion euros, said the minister, while the total bill for support for the energy this year will be at least 20 billion – “it's a safe bet it will be higher”.

"The State cannot be the last resort insurer of the increase in all energy prices", warned the minister.

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  • Russia

  • War in Ukraine

  • Bruno the Mayor

  • Oil

  • energy

  • Economy

  • Gas

  • Inflation

  • Economic crisis

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