Europe: Non-competitive Power Prices Derail Growth, by Daniel Lacalle

There’s a lesson here for those the US economy can be burdened with energy mandates that make no economic or common sense. From Daniel Lacalle at dlacalle.com:

Despite an endless chain of monetary and fiscal stimuli, the Eurozone consistently disappoints in growth and job creation. One of the reasons is demographics. No monetary and public spending stimulus can offset the impact on consumption and economic growth of an ageing population, as Japan can also confirm.

However, there is an especially important factor that tends to be overlooked. The lack of competitiveness of the Eurozone industry due to rising and non-competitive power prices.

Residential electricity prices in the European Union between 2010 and 2014 averaged near $240/MWh, whereas the U.S. averaged nearly $120/MWh, or less than half of EU prices. Gasoline and gasoil prices were also twice as expensive in the average of the European Union compared with the United States (https://www.globalenergyinstitute.org/sites/default/files/2019-07/EU_Report.pdf).

This trend has not improved. In 2020, the average residential consumer’s electricity price in Europe showed an increase of 13% over the average price ten years before.

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