Measures that European governments have taken to keep electricity costs lower are a “Ponzi scheme,” said Dan Brouillette, former energy secretary under the Trump administration.
“One of the easiest policy levers if you will, is that you can pass a bill, appropriate money, and give money to citizens to pay their electricity bills,” Brouillette told CNBC’s Hadley Gamble on the sidelines of the Gastech conference in Milan on Monday.
Brouillette warned of the “inflationary impact” of such measures. When asked if these measures resemble a Ponzi scheme, Brouillette replied, “You could describe it that way. There’s no question about that.”
“It alleviates the immediate pain of not being able to pay the electricity bill, but the money just moves in a circle … It just goes from the consumer to the electricity company … it’s not a long-term solution,” he added.
The EU countries’ energy ministers will meet on Friday to discuss methods to tame soaring gas prices.
Europe’s gas prices skyrocketed 30% higher on Monday after Russia announced the indefinite shutdown of its main gas supply pipeline. Europe, in recent months, sufered a sharp drop in gas exports from Russia, traditionally its largest energy supplier.