I have been a close observer of energy policy in Argentina for nearly twenty years. What I see now in the EU brings to mind Argentina's responses to high energy prices and shortages. A🧵to warn you what can happen when politicians take over energy markets: /1
1. Politicians protect Voters/Households from consequences of bad energy policy - preventing Demand Moderation. Price Caps/Subsidies to Households/Limiting Supply to Industry - whatever they have to do to keep Voters/Households' energy supplied and costs low. /2
2. Utilities and Transporters Get Squeezed - Profits eliminated through Price Caps and Regulation. Shareholders and Creditors of Utilities and Transporters are left out in the Cold. /3
3. Capex Eliminated and Opex Slashed - Energy infrastructure does not grow - is frozen. Maintenance Capex ratcheted back as is Opex. Initially the system continues to function, but over time lack of Maintenance Capex sees regular Energy Infrastructure system failures. /4
4. Industry Left Short of Energy & Political Lobbying/Favouritism Determine Who is Supplied. Politicians incentivised to keep Voters happy, so Households come first. Critical industry like Power Plants & Hospitals have a good claim to be supplied. After that it's Political. /5
5. Buyers/Importers of Energy Become Less Credit-Worthy, so must provide more Credit Support & Pay Higher Prices to Foreign Energy Producers to obtain supply. Gov't support for Energy Importation becomes Vital. Who can obtain such Government credit support becomes Political. /6
6. Exports of Energy - Gas, Power, Liquid Fuels, Coal - are reduced or eliminated. Neighbouring countries and trade partners are left to share some of the suffering (as Argentina did to Chile in 2006). /7
7. Political Control of Energy Sector, Bad Reactive Energy Policy & Low Returns Lead Energy Companies & Investors to Avoid Investing in-country. Investors are local players connected to politicians. /8
8. Explicit & Implicit Energy Subsidies to Industry & Households Remain in Place for a long time for political reasons. This will create a fiscal issue for public finances for some time. /9
9. Politicians Like the Power and Stay Involved in Energy Policy and Energy Markets for a Long Time - well after any crisis. /10
10. Explicit and Implicit Subsidies for Existing Energy Sources make penetration of new energy supplies difficult. A stasis of sorts sets in in the energy sector. New innovation and investment is limited, and dependent on politics. /11
11. There are policy options to meet immediate crisis needs: e.g. Credit Support to Utilities; Direct Subsidies to Poorest Households; Incentives to Non-Exporting/Consumptio Industry to Restrict Energy Usage; but when Politicians Step into Heart of Pricing & Supply - watch out.

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Andrew Haynes

Andrew Haynes Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @AndrewJWHaynes

Mar 16
The PERFECT Man to Serve as PM Justin Trudeau's personal "Special Rapporteur": David Johnston. So close and so aligned with Justin Trudeau it is uncanny. Let us count the ways Mr Johnston (fine person though he may be) is in NO WAY INDEPENDENT OF Justin Trudeau and China issues:
1. David Johnston has been close family friends w/ Trudeau for years - they were cottage neighbours. Johnston: "our friendship with Mr. Trudeau goes back to children's days when our five daughters & he & his two brothers skied together at Mt Tremblant /2 ctvnews.ca/politics/trude…
David Johnston understands the importance of the China-Canada economic relationship, and he has personally been involved in trade promotion between China and Canada. /3
Read 19 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!