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Energy price freeze would prolong the crisis, says IEA energy expert
Andy Mayer, energy analyst at free market think tank the Institute of Economic Affairs, commented on Liz Truss’ plan to freeze energy prices
“Price caps do not work. It is vital that the government relieves the worst impacts of high energy prices through targeted welfare and tax cuts. It is unwise to do it by encouraging energy use, as this will prolong the crisis.
“High prices mean incentives to increase energy supply and reduce demand. More supply means more gas, but also more of everything else that reduces our reliance on gas in the long term.
“Reducing demand means millions of businesses and households restricting non-essential uses and investing in energy efficiency. Welfare is there to prevent this being a choice between heating and eating.
“Embarking on this route will also invite demands for further price caps. The government will find it very quickly runs out of other people’s money, creating a far deeper problem for the public finances.”
Notes to editors
Contact: media@iea.org.uk / 07763 365520
IEA spokespeople are available for interview and further comment.
See attachment for free market thinking on energy policy.
