According to a very conservative estimate, if the government is forking out up to €250 million of subsidies every year to keep oil and gas prices at a $60 level, with gas set at an oil price benchmark, and purchasing the oil at an average of $70, the government would have spent at least up to €20 million in additional subsidies this year due to the war in Iran, in addition to its regular €20 million issue making the total of up to €40 million fuel and electricity subsidies in March.
In the grand scheme of government spending, €40 million is nothing, but the problem is that this expenditure is being made on a regular basis, eating gradually at the public coffers and accumulating in the long-term a massive amount of sunk-cost capital.
The government has no plan to address this issue – not even by hedging accordingly.
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