The gas storage facilities are well stocked, but Germany paid an unnecessarily high price for them. A look at the background shows how poorly our country is prepared for emergencies that really do not come as a surprise. A comment.
You can buy anything with money – says a German saying. And it’s very topical right now: The federal government has managed to fill Germany’s gas storage tanks to around 96 percent. That’s quite an achievement given the scarcity. But the eight billion euros that Germany spent on imports seem unnecessarily high to experts. The Federal Ministry of Economics responded to the accusation with the argument that speed was necessary to ensure supplies to Germany. It is very likely that the gas could have been bought cheaper, but there is no clear evidence. Nevertheless, this procedure, which costs billions, must be processed and everyone involved should learn three lessons from it:
First, the state should spend money in the same way that private consumers or companies usually do: with a reasonable risk-to-risk ratio. Even if there was a shortage of time and nobody could know in advance how the gas price would develop: Buying all of the gas on the spot market was something between a crazy bet and financial hara-kiri. There was no protection against falling prices. A mix of futures contracts and spot prices would have made much more sense. The price of European natural gas was at its lowest level since June on Monday. Germany has only been buying on the futures market since October 5th.
Secondly, contingency plans are needed to ensure that what happened here does not happen – namely that the Ministry of Economic Affairs entrusts a company with an order whose legally defined tasks are completely different: Trading Hub Europe GmbH (THE) has never bought gas on such a scale. The government should have commissioned market players who have more experience with this. According to experts, between ten and 20 percent could have been saved, i.e. around one billion euros.
But the very worst thing about this mishap is – and this is the third lesson – the fact that the situation could have arisen at all: On the one hand, there should have been a Europe that appeared on the market as one and bought gas together – instead of bidding each other up. On the other hand, the question arises as to why a German government is so poorly prepared for such an emergency: the fact that a conflict can arise with Russia and the gas tap is turned off is not a “black swan”. It is not a random event that hits us like a bolt from heaven. At the latest since Putin’s capture of Crimea in 2014, the Federal Ministry of Economics and Technology could have developed plans on how to quickly buy gas on the market. Then there would certainly have been a better solution than the hasty mandate for THE.
Germany stumbled into the corona pandemic poorly prepared. If a government is supposed to give citizens security, hundreds of billions of euros will of course also help. But it would be far better if one felt that a country with such organizational skills would be reasonably prepared for likely risks. Incidentally, all the CDU politicians who are now calling for consequences should also consider this.
The article “Germany gambles with taxpayers’ money” comes from WirtschaftsKurier.
